A new hybrid method for the fair assignment of productivity targets to indirect corporate processes

Abstract

Increasingly complex value chains and rising competition require firms to employ advanced planning mechanisms. Planning is frequently done by corporate entities based on performance analysis techniques. Within planning processes, total resource levels that should be allocated are regularly defined ex-ante, giving rise to decision problems that go beyond basic efficiency analysis. We have developed a method allowing the allocation of an ex-ante defined resource level across various processes of an organisation. We propose a mixed-integer/linear program that incorporates a social welfare function, allowing decision makers to consider fairness aspects. The practicability of the method is demonstrated in a real-life case study. The model-based allocation strategy is compared to alternative approaches. The proposed approach is beneficial in two dimensions: Either fewer activities are required to reach the total productivity target, or a lower overall strain level among the activities in respect of their improvement efforts can be achieved.

Keywords:

• Data envelopment analysis
• fairness
• mixed-integer/linear programming
• resource allocation
• productivity enhancement

Disclosure statement

No potential conflict of interest was reported by the authors.