Resource allocation and target setting: a CSW–DEA based approach

Resource allocation and target setting is part of the strategic management process of an organization. In this paper, we address the important issue of “optimally” allocating additional resources to the different operating units. Three different managerial interpretations of this question are presented, differing on the assumptions on the expected output increases. In each case, using multiplier data envelopment analysis (DEA) models and common set of weights (CSW), a new procedure for resource allocation and target setting is proposed. The proposed approach is innovative in its use of CSW and multi objective optimization, both of which are consistent with the centralized decision making character of the problem. The validity and usefulness of the proposed CSW–DEA models is shown using different datasets.