Centralized resource allocation based on cross-evaluation considering organizational objective and individual preferences

Centralized resource allocation is one of important ways for a central organization to control and manage its subordinate organizations. Among various allocation methods based on data envelopment analysis (DEA), the cross-efficiency DEA-based iterative method generates allocation results using peer appraisal which considers the preference from all individual decision-making units (DMUs). However, the planned outputs target from the existing method cannot be achieved under the restrictions of current technology and productivity level. In this study, we propose a new cross-evaluation-based resource allocation approach to address the issue. Our approach not only is preferred by all individual DMUs but also always generates achievable input–output targets. Furthermore, we consider a centralized decision-making case in which an overall goal of whole organization could also be incorporated. The model is also extended to a special case of input resource allocation, namely independent procurement where funds are distributed among DMUs and DMUs use the distributed parts to raise and allocate their own input factors by themselves. Two examples are employed to illustrate our approaches.