Target setting: A generalized concept of centralized resource allocation

This article first surveys the relationship between Lozano & Villa’s centralized resource allocation (CRA) and Mar-Molinero’s simplified model. Then, obtaining optimal solution to CRA model via the simplified model is discussed. This article proposes another model for determining a peer efficient unit for each decision making unit (DMU) which simplifies phase II of Lozano & Villa’s. Considering the importance of target setting issue in management, the proposed model, in addition to preserving the aim of CRA models, projects DMUs onto efficient frontier. The proposed model is illustrated by using a data set of earlier literatures.