A generalized data envelopment analysis approach for fixed cost allocation with preference information

Jiawei Yang, Dan Li and Yongjun Li

Omega, 2024, vol. 122, issue C

Abstract: Exploring a commonly acceptable fixed cost allocation (FCA) scheme is a challenging yet significant task, since one may contend with conflicting objectives. In this paper, we propose a new data envelopment analysis based FCA technique. The proposed approach aims to balance individual efficiency guarantees and collective preference objectives simultaneously. Particularly, a preference value loss (PVL) index is explicitly constructed to quantify the impact of preference considerations. Moreover, our generalized FCA strategy guarantees a minimal PVL and provides a reasonable and realizable lexicographic evaluation procedure to single out the final FCA scheme. Interestingly, the efficiency invariance and efficiency variance approaches from the prior literature are special cases of our proposed approach. Finally, the proposed approach is validated with a numerical example and an empirical application to bank maintenance fee distribution.

Keywords: Fixed cost allocation; Data envelopment analysis; Preference information; Value loss; Lexicographic algorithm (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0305048323001123
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jomega:v:122:y:2024:i:c:s0305048323001123

Ordering information: This journal article can be ordered from
http://www.elsevier.com/wps/find/supportfaq.cws_home/regional
https://shop.elsevie ... _01_ooc_1&version=01

DOI: 10.1016/j.omega.2023.102948

Access Statistics for this article

Omega is currently edited by B. Lev

More articles in Omega from Elsevier
Bibliographic data for series maintained by Catherine Liu (repec@elsevier.com).