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Dynamic capacity adjustments with reactive customers

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  • van Ackere, Ann
  • Haxholdt, Christian
  • Larsen, Erik R.

Abstract

In this paper we develop a behavioural model in which customers come and go based on their perception of waiting time (relative to other facilities) while managers gradually adjust the capacity of the facility based on their perception of demand. We explicitly account for the difference in access to information between existing and potential customers, which implies that the perception of potential customers lags the perception of current customers. We investigate the outcome of the interaction between these simultaneous dynamic decision processes, and in particular the impact of the lags created by the perception formation process and the time to implement desired changes in capacity. These multiple delays may result in customers and service provider being out of step: customers walk away just as the service provider manages to bring extra capacity online.

Suggested Citation

  • van Ackere, Ann & Haxholdt, Christian & Larsen, Erik R., 2013. "Dynamic capacity adjustments with reactive customers," Omega, Elsevier, vol. 41(4), pages 689-705.
    • Handle: RePEc:eee:jomega:v:41:y:2013:i:4:p:689-705
    DOI: 10.1016/j.omega.2012.09.007
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    Cited by:

    1. Ma, Xiaoyu & Deng, Tianhu & Xue, Mengying & Shen, Zuo-Jun Max & Lan, Boxiong, 2017. "Optimal dynamic pricing of mobile data plans in wireless communications," Omega, Elsevier, vol. 66(PA), pages 91-105.
    2. Klein, Robert & Kolb, Johannes, 2015. "Maximizing customer equity subject to capacity constraints," Omega, Elsevier, vol. 55(C), pages 111-125.
    3. Delgado-Alvarez, Carlos A. & van Ackere, Ann & Larsen, Erik R & Arango-Aramburo, Santiago, 2017. "Managing capacity at a service facility: An experimental approach," European Journal of Operational Research, Elsevier, vol. 259(1), pages 216-228.
    4. Wang, Haiyan & Olsen, Tava Lennon & Liu, Guiqing, 2018. "Service capacity competition with peak arrivals and delay sensitive customers," Omega, Elsevier, vol. 77(C), pages 80-95.
    5. Mørch, Ove & Fagerholt, Kjetil & Pantuso, Giovanni & Rakke, Jørgen, 2017. "Maximizing the rate of return on the capital employed in shipping capacity renewal," Omega, Elsevier, vol. 67(C), pages 42-53.

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