Centralized Resource Allocation Based on the Bargaining Approach

Lei Fang (), Hecheng Li () and Zhongbin Wang
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Lei Fang: Business School, Nankai University, Tianjin 300071, P. R. China
Hecheng Li: School of Mathematics and Statistics, Qinghai Normal University, Xining 810016, P. R. China
Zhongbin Wang: Business School, Nankai University, Tianjin 300071, P. R. China

Asia-Pacific Journal of Operational Research (APJOR), 2021, vol. 38, issue 02, 1-18

Abstract: In a centralized decision-making environment, the central unit supervises all the operating units’ production activities and focuses on achieving the overall goals of the entire organization from a global viewpoint by allocating available resources to them. However, all the current models about resource allocation under the centralized decision-making commonly exhibit the non-unique optimal solutions and neglect the competition and trade-off among all the DMUs to maximize the individual aggregated output of each DMU. This phenomenon makes the allocation result imbalanced and unacceptable to all the DMUs. To overcome this problem, this paper introduces Nash bargaining game theory to develop a new centralized resource allocation model which not only takes into account the overall goals of the organization from an overall perspective, but also considers competition and trade-off among all the DMUs. Finally, an empirical example is used to demonstrate the applicability of our proposed approach. The results show that our Nash bargaining game model not only guarantees the uniqueness of the optimal resource allocation results, but also improves the balance of the resource allocation result, which makes it acceptable to all the DMUs.

Keywords: Data envelopment analysis; resource allocation; bargaining game (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (3)

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DOI: 10.1142/S0217595920500499

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