On Centralized Resource Utilization and its Reallocation by Using DEA

The standard DEA model allows different DMU units to set their own priorities

for the inputs and outputs that form part of the efficiency assessment. In the case of a centralized

organization with many outlets, such as an education authority that is responsible

for many schools, it may be more sensible to operate in the most efficient way, but under a

common set of priorities for all DMUs. The algorithm that is used to do this, the centralized

resource allocation model, does just this. We show that the centralized resource allocation

model can be substantially simplified and we interpret the simplifications and show how the

model works using real data of Spanish public schools. Apart from finding the best way to

reallocate resource among the schools, it is shown that the most desirable operating unit is

found to be a by-product of the estimation. This is useful information when planning new

schools.