Centralized resource allocation based on the Cost-revenue analysis

In this paper, we present a centralized approach for reallocating resources based on revenue efficiency across a set of decision making units (DMUs) under a centralized decision-making environment. The proposed models extend the traditional revenue efficiency model by allowing for reallocation of inputs within the DMUs. Numerical examples are presented to illustrate the proposed approach. The results show that our approach is able to achieve higher total revenue compared with that of the conventional non-centralized revenue efficiency model. Furthermore, a cost-revenue analysis is performed between the reallocation cost and the revenue increase from the reallocation of inputs, which can provide information for the central decision-maker with respect to whether or how to reallocate the resources across the DMUs. (C) 2015 Elsevier Ltd. All rights reserved.