Best cooperative partner selection and input resource reallocation using DEA

Reallocation of input resources (RIR) is a process by which certain decision making units (DMUs) reallocate resources among themselves; a process that occurs frequently in many enterprises. In this paper, a new data envelopment analysis (DEA) approach is developed to select the best cooperative partner DMU. Context‐dependent DEA is used to identify the different levels of best‐practice frontiers. Two DEA‐based models are established for two cooperative scenarios, namely, resources pooling only and best‐practice sharing. A cooperative method is applied to determine how to reallocate the input resources, and Shapley value is used to estimate the revenue changes that the various DMUs should expect after RIR. Two different situations with different objectives are considered. One objective is to maximize total revenue for the partnership, while the other is to maximize the Shapley value. The proposed approaches are illustrated with two examples.