Centralized Production Planning Based on Data Envelopment Analysis

In large organizations with a c entralized decision-making environment like supermarket chains, selling or producing products usually i nvolves participation of all individual units. Motivated by a production-planning problem regularly faced by the cen tral decision-making unit of such an organization, this paper attem pts to arrange new input-output plans for all units in the next tim e period when dem and changes can be forecas ted. The so-called central unit is assumed to be interes ted in maximizing the total net profits earned by all individual units. A new approach is developed based on da ta envelopment analysis to f ind the m ost preferred plans. All these indivi dual units are supposed to be able to m odify their inputs and outputs in the original production possibility set under certain conditions. The planning process is sim ple and widely applicable, wh ich could act as a reaso nable reference for decision makers. A simple num erical example and a real world appl ication are given to illustrate the idea.