Centralised resource reallocation and reduction with common weight DEA model

Abstract

Attaining higher efficiency in the utilisation of resources by organisations for producing the desired outputs is seen as a way forward for gaining market competitiveness, being more sustainable and resilient. Optimal reallocation of centrally managed resources among a group of decision making units is recognised as an effective strategy for repositioning an organisation's production possibility set to improve its performance. In this paper, we propose new resource reallocation models for optimal redistribution and reduction of selective centralised resources maximising the overall efficiency of the organisation simultaneously targeting the efficiency of the DMUs at the improved level. The proposed models are formulated based on a common weight DEA model to eliminate the problem of weight flexibility in conventional DEA models. The models incorporate the constraints for defining a feasible production plan as well as the judgement of the decision maker through input-output bounds. The applicability of the proposed methods is demonstrated through a case study of an electronics retail chain and also contrasted with existing studies.