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

Yongjun Li, Feng Li, Ali Emrouznejad, Liang Liang, Qiwei Xie

Research output: Contribution to journalArticle

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.
Original languageEnglish
Pages (from-to)373–394
Number of pages22
JournalAnnals of Operations Research
Volume274
Issue number1-2
Early online date21 Apr 2018
DOIs
Publication statusPublished - 15 Mar 2019

Bibliographical note

The final publication is available at Springer via http://dx.doi.org/10.1007/s10479-018-2860-9

Keywords

  • Cooperative game
  • Data envelopment analysis (DEA)
  • Fixed cost allocation
  • Nucleolus

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