Customer equilibrium and optimal pricing in an M/G/1 queue with heterogeneous rewards and waiting cost rates

Ole Bueker, Bara Kim, Jeongsim Kim

    Research output: Contribution to journalArticlepeer-review

    6 Citations (Scopus)

    Abstract

    We consider an unobservable M/G/1 queue in which customers are allowed to join or balk upon arrival. The service provider charges the same admission fee to all joining customers. All joining customers receive a reward from completion of service and incur a waiting cost. The reward and waiting cost rate are random, however the customers know their own values upon arrival. We characterize the customer's equilibrium strategy and the optimal prices associated with profit and social welfare maximization.

    Original languageEnglish
    Pages (from-to)152-156
    Number of pages5
    JournalOperations Research Letters
    Volume48
    Issue number2
    DOIs
    Publication statusPublished - 2020 Mar

    Bibliographical note

    Funding Information:
    We are grateful to the Area Editor and Associate Editor for valuable comments and suggestions, which greatly improved this paper. B. Kim’s research was supported by the National Research Foundation of Korea (NRF) grant funded by the Korea government (MSIP) ( NRF-2017R1A2B4012676 ). J. Kim’s research was supported by Basic Science Research Program through the National Research Foundation of Korea (NRF) funded by the Ministry of Education, Republic of Korea ( 2017R1D1A1B03029542 ).

    Publisher Copyright:
    © 2020 Elsevier B.V.

    Keywords

    • Equilibrium strategy
    • Optimal price
    • Profit rate
    • Social benefit rate

    ASJC Scopus subject areas

    • Software
    • Management Science and Operations Research
    • Industrial and Manufacturing Engineering
    • Applied Mathematics

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