Resource allocation and target setting for parallel production system based on DEA

Abstract

The paper proposes methodology for resource allocation and target setting based on DEA (data envelopment analysis). It deals with organization can be modeled as consisting of several production units, each of which has parallel production lines. The previous studies in the DEA literature only deal with reallocating/allocating organizational resources to production units and set targets for them. In their researches, the production unit is treated as a black box. In such circumstances, how to arrange the production at production unit level is not clear. This paper serves to generate resource allocation and target setting plan for each production unit by opening the black box. The proposed model exploits production information of production lines in generating production plans. The resulting plan has following characteristics: (1) the performance of each production lines are evaluated under common weights; (2) the weights chose for evaluation keep the efficiency of the entire unit not worse off; (3) the worst behaved production line in the production unit under evaluation are improved as much as possible. Finally, the real data of a production system extracted from extant literature are used to demonstrate the proposed method.