A DEA Approach for Target Setting and Resource Allocation

This study develops a new approach to addressing problems in target setting and resource allocation on the basis of data envelopment analysis (DEA). Such problems are encountered by organizations with a centralized decision-making environment, which is characterized by multiple individual units participating in total consumption to yield total production. This research is motivated by the need for new input and output planning in all individual decision-making units (DMUs) for succeeding production seasons, during which changes in demand and supply can be predicted. As part of the proposed approach, a model based on DEA envelopment concept is established to prevent a decline in the efficiency of DMUs after resource allocation and to determine suitable benchmarks simultaneously for new production plans. On the basis of current optimal consumption and production levels, the approach is used to arrange plans in proportion with unit ability. The proposed method is applied in a real-world case.