Optimal control of a queue with high-low delay announcements: The significance of the queue

Hassin Refael, Koshman Alexandra

Research output: Chapter in Book/Report/Conference proceedingConference contributionpeer-review

Abstract

This article deals with strategic control of information in a single-server model. It considers an M/M/1 system with identical customers. There is a single cut-off number, and the level of congestion is said to be low (high) if the queue length is less than (at least) this value. The firm can dynamically change the admission fee according to the level of congestion. Arriving customers cannot observe the queue length, but they are informed about the current level of congestion and the admission fee. The article deals with finding the profit maximizing admission fee, using analytical and numerical methods. We observe that such a pricing regime can be used to increase the profit and the proportion of the increase relative to the single price unobservable queue is unbounded. We observe that the profit maximizing threshold is usually quite small and therefore raise a question whether there is a significant difference in profit when rather than being informed about the congestion level, customers only join the system when the server is idle. We also investigate this question considering the classical observable model.

Original languageEnglish
Title of host publicationProceedings of the 8th International Conference on Performance Evaluation Methodologies and Tools, VALUETOOLS 2014
PublisherICST
Pages233-240
Number of pages8
ISBN (Electronic)9781631900570
DOIs
StatePublished - 2014
Event8th International Conference on Performance Evaluation Methodologies and Tools, VALUETOOLS 2014 - Bratislava, Slovakia
Duration: 9 Dec 201411 Dec 2014

Publication series

NameProceedings of the 8th International Conference on Performance Evaluation Methodologies and Tools, VALUETOOLS 2014

Conference

Conference8th International Conference on Performance Evaluation Methodologies and Tools, VALUETOOLS 2014
Country/TerritorySlovakia
CityBratislava
Period9/12/1411/12/14

Keywords

  • Dynamic pricing
  • Game theory
  • Queueing theory

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