Mathematical model for performance based budgeting by productivity approach (Case study: Gas refineries in Iran)

The performance-based budgeting (PBB) allocates budget to outcomes. This research, with the introduction of productivity as an alternative to the outcomes, presents a mathematical model for performance-based budgeting in order to allocate budget to productivity criteria. New trends in budgeting are process-oriented, so the productivity is suitable for PBB. This research presents a mathematical model for PBB. The model has been designed by Chebyshev's goal programming technique. Data for calculating productivity indicators were collected from gas refineries of Iran in 2011–2015 and analyzed by Excel and GAMS software. Then, the model was tested for determining the 2016 budget of those refineries. The model was solved by LINGO software by linking it to Excel. The solution of the model reduced 1.47% of the total refinery's budget compared with the actual budgets for 2016. The results of this study showed that the presented model provides significant improvement in the level of achievement of goals and the objective function. Saving costs and collecting funds from low-productivity units and directing them to high productivity is a strategic and important policy.