Abstract
Fixed cost allocation among groups of entities is a prominent issue in numerous organisations. Addressing this issue has become one of the most important topics of the data envelopment analysis (DEA) methodology. In this study, we propose a fixed cost allocation approach for basic two-stage systems based on the principle of efficiency invariance and then extend it to general two-stage systems. Fixed cost allocation in cooperative and noncooperative scenarios are investigated to develop the related allocation plans for two-stage systems. The model of fixed cost allocation under the overall condition of efficiency invariance is first developed when the two stages have a cooperative relationship. Then, the model of fixed cost allocation under the divisional condition of efficiency invariance wherein the two stages have a noncooperative relationship is studied. Finally, the validation of the proposed approach is demonstrated by a real application of 24 nonlife insurance companies, in which a comparative analysis with other allocation approaches is included.
| Original language | English |
|---|---|
| Pages (from-to) | 662-675 |
| Number of pages | 14 |
| Journal | European Journal of Operational Research |
| Volume | 283 |
| Issue number | 2 |
| Early online date | 20 Nov 2019 |
| DOIs | |
| Publication status | Published - 1 Jun 2020 |
Bibliographical note
© 2019, Elsevier. Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International http://creativecommons.org/licenses/by-nc-nd/4.0/Funding: National Natural Science Foundation of China (Nos. 71871223, 91846301, 71631008), Innovation‐Driven Planning Foundation of Central South University (2019CX041), Major Project for National Natural Science Foundation of China (71790615).
Keywords
- Cooperative model
- Data envelopment analysis
- Efficiency invariance principle
- Fixed cost allocation
- Noncooperative model