Seminar:Allocation of Funds in Bilevel Subsidy Welfare Programs

Senay Solak

Allocation of Funds in Bilevel Subsidy Welfare Programs 

Isenberg School of Management at the University of Massachusetts Amherst

 Date: 22/11/2023

Location: AB1.510

Time: 14:40-15:30

Abstract: Most subsidy welfare programs operate in a bilevel hierarchical structure, where a funding agency allocates funds to multiple service agencies. These service agencies invest in activities within their areas to generate societal impact for beneficiaries by enhancing the quantity and quality of services at local providers. The funds allocation decisions in such programs are complicated by consideration of equity in the societal impact generated across different areas, intricate relationships among contextual factors in societal impact generation, and information asymmetry between different entities. We develop a model to analyze how the funding agency’s funds allocation decisions lead to the most societal impact in an equitable manner. Further, we compare the resulting outcomes—i.e., the inequity levels and total societal impact—under the equity-ensuring method with those under different funding methods. Given the growing impetus to consider equity in their operations, we demonstrate how funding agencies should incorporate the within-area factors in addition to the between-area factors in their optimal allocation decisions. Finally, using a case study, we illustrate that the proposed optimal decisions achieve equity while enhancing the overall societal impact by approximately 3% versus current allocation decisions.

Bio: Dr. Senay Solak is the John F. Smith Memorial Professor and Department Chair in the Operations and Information Management Department in the Isenberg School of Management at University of Massachusetts Amherst.  Dr. Solak holds Ph.D. and M.S. degrees in Industrial Engineering and Operations Research from Georgia Institute of Technology, and a B.S. degree in Electrical Engineering from the U.S. Naval Academy. Dr. Solak’s main research interests involve portfolio management for technology and capital investment projects, with a focus on sustainable and nonprofit operations management. His methods focus on creating value for organizations through better management of uncertainty in such problems. Dr. Solak’s research has been funded by NSF, NASA, FAA, and other industry organizations, and his work has appeared in various top-tier journals and conference proceedings.