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A cost allocation model based on the combination of data envelopment analysis and Shannon entropy (case study: branches of the central post of Isfahan)

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  • Zohreh Safa
  • Reza Maddahi

Abstract

The method used for allocation of costs in this study has several stages. In stage 1, various types of data envelopment analysis (DEA) models were used to assess the efficiency of decision-making units (DMUs), including constant return to scale and variable return to scale with a variety of input and output types in radial and non-radial states. In stage 2, Shannon entropy method was used to combine the obtained efficiencies for each decision making unit. In stage 3, the allocation of costs was done based on the combined efficiency number for each unit obtained in phase 2. The proposed cost allocation model was then implemented in an example and its fairness was compared with similar methods using the Gini coefficient method. Finally, the proposed model was investigated in Central Post of Isfahan.

Suggested Citation

  • Zohreh Safa & Reza Maddahi, 2021. "A cost allocation model based on the combination of data envelopment analysis and Shannon entropy (case study: branches of the central post of Isfahan)," International Journal of Applied Management Science, Inderscience Enterprises Ltd, vol. 13(1), pages 37-51.
    • Handle: RePEc:ids:injams:v:13:y:2021:i:1:p:37-51
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