Allocation of funds to R&D laboratories by a central agency

The problem of allocating funds to a number of R&D laboratories under the control of a federal or central agency is considered, which is a two-stage decision-making process involving the optimal selection of projects within laboratories and allocation of budgets to the laboratories by the federal organization. An analytical method, based upon the concept of `equitable dissatisfaction,´ is presented for solving the problem. A numerical example is given to illustrate the application of the model.