Data envelopment analysis in resource allocation: An application to forest management

This paper discusses the resource allocation problem for not-for-profit organizations that have control over several production units of similar functions. A case of budget allocation among the subdistricts of a forest district in Taiwan is exemplified to illustrate the idea. The model proposed is a nonlinear fractional program superimposed upon the data envelopment analysis framework. This nonlinear fractional program can be transformed to a model similar to the generalized linear program and solved by a type of decomposition method. Within prespecified ranges, the district office searches for ways of allocating a fixed amount of budget to its subdistricts to result in a higher aggregate efficiency score. Wider ranges allow for more flexibility in allocating budget; consequently, higher aggregate efficiency scores are experienced. Since this method is more objective, it is more persuasive to the subdistricts in allocating resources.