Bi-level programming and multi-objective optimization for the distribution of resources in hierarchical organizations

Abstract

The decision regarding the hierarchical distribution of resources is crucial for many organizations that want to allocate such resources efficiently. At the upper level of the hierarchy, a decision-maker may have an objective and a set of feasible solutions partially determined by the lower level. Nevertheless, the upper level can influence but not control the decision-maker at the lower level. Moreover, the objectives of the upper and lower levels are conflicting. Hence, the hierarchical distribution of resources can be formulated as a bi-level programming model. This paper reformulates the hierarchical allocation of resources. The Hooke-Jeeves (HJ) algorithm and the hybrid scatter search–Nelder-Mead (SSNM) method are proposed to solve the newly formulated problem. The problem is also analyzed from a multi-objective perspective to equally prioritize the upper and lower levels while subjecting each to an interdependent set of constraints; a multi-objective scatter search algorithm (MSSA) was developed for that purpose. Tailor-made instances were also designed for the implementation of the developed algorithms. The findings demonstrated that the HJ algorithm provides the best solution according to the upper-level objective function. However, it does not guarantee the best result for the lower level. In comparison, MSSA has a set of best possible solutions for both objectives. The hybrid SSNM method could not match the results provided by the former methods.