Price and speed decisions in customer-intensive services with two classes of customers

In many customer-intensive services, the perceived quality of service decreases in the speed of service. Usually, an increase in service speed induces different marginal reductions in quality for heterogeneous customers. To bring insight into the managerial implications of this difference, we classify customers in terms of intensity parameters, and investigate the behavior of each class of customers in a queueing framework. The optimal service speed and price are derived to maximize service provider’s revenue. Our results demonstrate that no class is always attractive to the provider, and thus there are usually several combinations of service price and speed reaching the same maximal revenue. Moreover, under some mild conditions, the provider could gain more revenue by treating different classes with discrimination than by adopting uniform treatment.     

National and store brand advertising strategies

As the propensity of premium store brands (SBs) increases, retailers must consider different ways to drive sales besides promotional strategies. With this in mind, we consider a national brand (NB) and a (premium) SB co-existing in a market. Each brand has to decide the amount to invest in advertising its product and the prices to charge its customers, which can be determined separately or in unison. When either advertising expenditures or pricing decisions are set, each brand must keep in mind that the advertising efforts and revenue may spillover between the two brands, customers who intend to purchase the NB may end up purchasing the SB and vice versa. We derive an analytical model of the situations described and characterize equilibrium advertising decisions. We find that the characteristics of a premium SB may depend on which marketing/promoting instrument (advertising or pricing) is the primary method for driving demand; and in some situations an NB may be better off to not advertise at all and instead let the premium SB carry out all of the advertising.     

Optimal revenue management in two class pre-emptive delay dependent Markovian queues

In this paper, we present a comparative study on the total revenue generated with pre-emptive and non pre-emptive priority scheduler for a fairly generic problem of pricing the server’s surplus capacity in a single server Markovian queue. The specific problem is to optimally price the server’s surplus capacity by introducing a new class of customers (secondary class) without affecting the pre-specified service level of its current customers (primary class) when pre-emption is allowed. Pre-emptive scheduling is used in various applications. First, a finite step algorithm is proposed to obtain global optimal operating and pricing parameters for this problem. These optimal operating and pricing parameters constitute a unique Nash equilibrium in a certain two player non cooperative game. We then describe the range of service level where pre-emptive scheduling gives feasible solution and generates some revenue while non pre-emptive scheduling has infeasible solution. Further, some complementary conditions are identified to compare revenue analytically for certain range of service level where strict priority to secondary class is optimal. Our computational examples show that the complementary conditions adjust in such a way that pre-emptive scheduling always generates more revenue. Theoretical analysis is found to be intractable for the range of service level when pure dynamic policy is optimal. Hence, extensive numerical examples are presented to describe different instances. It is noted in numerical examples that pre-emptive scheduling generates at least as much revenue as non pre-emptive scheduling. A certain range of service level is identified where improvement in revenue is quite significant.     

基于分类服务机制的可预约排队系统设计和服务定价研究

采取合理有效的服务机制和服务定价是确保服务型企业持续有效运行的重要方式,服务提供商设计合理的服务策略可以使得服务收益达到最优。本文以服务可预约的排队系统为研究背景,对服务提供商分类服务机制选择和服务定价策略进行研究。通过考虑由两种服务策略下顾客之间的平均等待时间的对比和顾客等待厌恶心理参数形成的全新顾客服务效用模型,给出服务提供商在不同服务机制下的最优服务策略以及顾客市场规模对其服务策略选择的影响。研究表明,当预约顾客的市场规模相对较小时,服务提供商可以采取分类服务机制,即同时服务预约顾客和未预约顾客以增加服务收益,反之亦然。此外,预约顾客等待厌恶程度能够显著增大服务提供商的服务定价。     

Incentive mechanism to control customer buy-down behaviour

Airlines have successfully practiced revenue management over the past four decades and enhanced their revenue. Most of the traditional models that are applied assume that customers buying a high-fare class ticket will not purchase a low-fare class ticket even if it is available. This is not a very realistic assumption and has led to revenue leakage due to customers exhibiting buy-down behaviour. This paper aims at devising a suitable incentive mechanism that would incite the customer to reveal his nature. This helps in reducing revenue leakage. We show that the proposed incentive mechanism is profitable to both the buyer and seller and hence ensures the buyers participation in the mechanism.     

考虑预订取消率的酒店退订政策选择演化博弈研究

基于顾客的取消预订行为,在Hotelling模型框架下构建了酒店的博弈模型,分析了两竞争性酒店退订政策选择的问题。研究表明,当顾客对酒店之间水平差异的敏感程度较高时,若两酒店的预订取消率差异较小,则两酒店都将选择宽松的退订政策;若取消率差异较大,则取消率较高的酒店将选择严格的退订政策,而取消率较低的酒店将选择宽松的退订政策。当顾客对酒店之间水平差异的敏感程度较低且两酒店的预订取消率差异较小时,系统存在两个演化稳定策略,酒店只有选择与竞争对手相反的策略才能获得最大收益。本研究能够为酒店的决策制定和收益管理提供一定的支持。     

企业资本预算中的风险补偿与资本配置效率研究

在分权化企业的资本预算中，由于存在着分部管理者的道德风险与风险规避偏好，总部管理者必须对包含风险补偿的激励成本与激励努力带来的预期收益两者进行权衡。当努力导致的收益介于最优激励成本与风险规避偏好导致的次优激励成本之间时，风险补偿的存在将会导致总部管理者降低激励努力水平，从而减少了投资的期望收益，降低了资本的配置效率。     

An exact algorithm for a vehicle routing problem with time windows and multiple use of vehicles

The vehicle routing problem with multiple use of vehicles is a variant of the classical vehicle routing problem. It arises when each vehicle performs several routes during the workday due to strict time limits on route duration (e.g., when perishable goods are transported). The routes are defined over customers with a revenue, a demand and a time window. Given a fixed-size fleet of vehicles, it might not be possible to serve all customers. Thus, the customers must be chosen based on their associated revenue minus the traveling cost to reach them. We introduce a branch-and-price approach to address this problem where lower bounds are computed by solving the linear programming relaxation of a set packing formulation, using column generation. The pricing subproblems are elementary shortest path problems with resource constraints. Computational results are reported on euclidean problems derived from well-known benchmark instances for the vehicle routing problem with time windows.     

A differentiated service scheme to optimize website revenues

We consider a website host server with web quality of service (QoS) capabilities to offer differentiated services. A quantitative modelling framework is set up to analyse the economic benefits of differentiated services and to build optimization models for managing the website host's connection bandwidth to the Internet (which is assumed to be the bottleneck factor determining the QoS). Three models are formulated corresponding to three operational scenarios to provide differentiated services. The first is for the marketing manager to classify visit requests as premium or basic when the information technology (IT) manager has already reserved bandwidths for the two classes, and the second is for the IT manager to allocate the total available bandwidth to each class when the marketing manager has already designated which visit requests are premium and which are basic. The third is for the joint optimization of request classification and bandwidth allocation when centralized coordination is possible. Analytic results are obtained for a special case that corresponds to very impatient customers requesting large amounts of data. Qualitative insights gained and numerical results obtained strongly support the implementation of differentiated services. More interestingly, the decentralized models that use simple and rough-cut rules yield solutions almost as good as the joint optimization model.     

服务台不可靠的重试排队系统均衡分析

本文研究服务台不可靠的M/M/1常数率重试排队系统中顾客的均衡进队策略, 其中服务台在正常工作和空闲状态下以不同的速率发生故障。在该系统中, 服务台前没有等待空间, 如果到达的顾客发现服务台处于空闲状态, 该顾客可占用服务台开始服务。否则, 如果服务台处于忙碌状态, 顾客可以选择留下信息, 使得服务台在空闲时可以按顺序在重试空间中寻找之前留下信息的顾客进行服务。当服务台发生故障时, 正在被服务的顾客会发生丢失, 且系统拒绝新的顾客进入系统。根据系统提供给顾客的不同程度的信息, 研究队长可见和不可见两种信息情形下系统的稳态指标, 以及顾客基于收入-支出函数的均衡进队策略, 并建立单位时间内服务商的收益和社会福利函数。比较发现, 披露队长信息不一定能提高服务商收益和社会福利。     

A framework for solving network revenue management problems with customer choice behavior

Revenue management is the process of understanding, anticipating and influencing consumer behavior in order to maximize revenue. Network revenue management models attempt to maximize revenue when customers buy bundles of multiple resources. The dependence among the resources in such cases is created by customer demand. Network revenue management can be formulated as a stochastic dynamic programming problem whose exact solution is computationally intractable. Solutions are based on approximations of various types. Customer choice behavior modeling has been gaining increasing attention in the revenue management. A framework for solving network revenue management problems with customer choice behavior is proposed. The modeling and solving framework is composed from three inter-related network structures: basic network model, Petri net, and neural net.     

寡占市场易逝性产品收入管理的博弈分析

传统的收入管理没有考虑市场竞争的情况。本研究了销售同质易逝品的两家公司的存量控制策略，证明存在纯策略的纳什均衡。通过进一步与垄断(联盟)情况下的比较，得出在竞争状况下商家将为高价顾客预留更多的产品。     

Computing approximate Nash equilibria in general network revenue management games

Computing optimal capacity allocations in network revenue management is computationally hard. The problem of computing exact Nash equilibria in non-zero-sum games is computationally hard, too. We present a fast heuristic that, in case it cannot converge to an exact Nash equilibrium, computes an approximation to it in general network revenue management problems under competition. We also investigate the question whether it is worth taking competition into account when making (network) capacity allocation decisions. Computational results show that the payoffs in the approximate equilibria are very close to those in exact ones. Taking competition into account never leads to a lower revenue than ignoring competition, no matter what the competitor does. Since we apply linear continuous models, computation time is very short.     

When should service firms provide free experience service?

By providing a free experience service, a service firm can attract more uninformed customers. However, it could reversely effect the delay-sensitive, informed customers’ decision. In this paper, we study a priority queueing system with free experience services. We study the customer behavior in equilibrium after we derive the expected customer waiting time. We then construct the service firm’s revenue function and obtain an optimal strategy for the service firm. Our results suggest that when the market size of informed customers is relatively small, the firm should consider providing free experience services for uninformed customers. Conversely, if the demand rate of potential informed customers is quite high, the firm should ignore uninformed customers.     

Optimal pricing for service facilities with self-optimizing customers

Many service industries (e.g., walk-in clinics, vehicle inspection facilities, and data-processing centers) have customers who choose among congested facilities, and select the facility with the lowest combination of travel cost plus congestion cost at the facility. In general, customers over-utilize attractive facilities, causing higher costs than if customers were assigned to facilities to minimize total costs. Optimal facility prices induce customers to select facilities that minimize total cost. We find optimal facility prices and show they equal charging customers for the impact (net costs and benefits) they cause for others. We explore a rich flexibility that allows a range of optimal prices, useful when negotiating the implementation of facility fees. Facility prices can be positive or negative (price discounts), and can be adjusted to be all positive, or to provide net subsidy or net revenue. We contribute to unifying and generalizing several disparate streams of research.     

Revenue-maximizing pricing and scheduling strategies in service systems with flexible customers

We propose a model of service operations systems in which customers are heterogeneous both in terms of their private delay sensitivity and flexibility. A service provider maximizes revenue through jointly optimal pricing and steady-state scheduling strategies. We provide a complete analysis for this generally intractable problem. Interestingly, when one queue accommodates a large population of impatient customers, it may be desirable to strategically idle the server in the other queue, which is a phenomenon new to the literature.     

Optimal valuation of American callable credit default swaps under drawdown of Lévy insurance risk process

This paper discusses the valuation of credit default swaps, where default is announced when the reference asset price has gone below certain level from the last record maximum, also known as the high-water mark or drawdown. We assume that the protection buyer pays premium at a fixed rate when the asset price is above a pre-specified level and continuously pays whenever the price increases. This payment scheme is in favour of the buyer as she only pays the premium when the market is in good condition for the protection against financial downturn. Under this framework, we look at an embedded option which gives the issuer an opportunity to call back the contract to a new one with reduced premium payment rate and slightly lower default coverage subject to paying a certain cost. We assume that the buyer is risk neutral investor trying to maximize the expected monetary value of the option over a class of stopping time. We discuss optimal solution to the stopping problem when the source of uncertainty of the asset price is modelled by Lévy process with only downward jumps. Using recent development in excursion theory of Lévy process, the results are given explicitly in terms of scale function of the Lévy process. Furthermore, the value function of the stopping problem is shown to satisfy continuous and smooth pasting conditions regardless of regularity of the sample paths of the Lévy process. Optimality and uniqueness of the solution are established using martingale approach for drawdown process and convexity of the scale function under Esscher transform of measure. Some numerical examples are discussed to illustrate the main results.     

An optimal mechanism charging for priority in a queue

We derive a revenue-maximizing scheme that charges customers who are homogeneous with respect to their waiting cost parameter, for a random fee in order to become premium customers. This scheme incentivizes all customers to purchase priority, each at his/her drawn price. This is repeated for the case where customers are heterogeneous. The mechanisms are based on the fact that once some customers get priority, its value of the other gets even higher.