Allocating the fixed cost: an approach based on data envelopment analysis and cooperative game

Yongjun Li (), Feng Li (), Ali Emrouznejad (), Liang Liang () and Qiwei Xie ()
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Yongjun Li: University of Science and Technology of China
Feng Li: University of Science and Technology of China
Ali Emrouznejad: Aston University
Liang Liang: University of Science and Technology of China
Qiwei Xie: CAS Center for Excellence in Brain Science and Intelligence Technology

Annals of Operations Research, 2019, vol. 274, issue 1, No 18, 373-394

Abstract: Abstract Allocating the fixed cost among a set of users in a fair way is an important issue both in management and economic research. Recently, Du et al. (Eur J Oper Res 235(1): 206–214, 2014) proposed a novel approach for allocating the fixed cost based on the game cross-efficiency method by taking the game relations among users in efficiency evaluation. This paper proves that the novel approach of Du et al. (Eur J Oper Res 235(1): 206–214, 2014) is equivalent to the efficiency maximization approach of Li et al. (Omega 41(1): 55–60, 2013), and may exist multiple optimal cost allocation plans. Taking into account the game relations in the allocation process, this paper proposes a cooperative game approach, and uses the nucleolus as a solution to the proposed cooperative game. The proposed approach in this paper is illustrated with a dataset from the prior literature and a real dataset of a steel and iron enterprise in China.

Keywords: Data envelopment analysis (DEA); Fixed cost allocation; Cooperative game; Nucleolus (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (15)

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DOI: 10.1007/s10479-018-2860-9

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