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The impact of subcontracting on service systems with time-sensitive strategic customers

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  • Benioudakis, Myron

Abstract

We consider a service system consisting of a provider who offers a service in a make-to-order fashion to a market of potential customers, and a subcontractor who can be recruited to speed up the service process. The provider operates a Markovian queue at a standard service rate and charges customers a fixed fee upon joining. At each busy cycle, the provider offers a salary to a subcontractor in exchange for increasing the service rate. The subcontractor decides whether to accept the offer while incurring a labor cost per unit of time. Arriving customers, who are strategic and time-sensitive, cannot observe the system’s queue length or the implemented service policy. They have a service value upon completion and incur a waiting cost per unit of time. Based on their utility maximization, they make individual join-or-balk decisions, considering both the behavior of other customers and the subcontractor’s strategic involvement.

Suggested Citation

  • Benioudakis, Myron, 2026. "The impact of subcontracting on service systems with time-sensitive strategic customers," International Journal of Production Economics, Elsevier, vol. 292(C).
    • Handle: RePEc:eee:proeco:v:292:y:2026:i:c:s0925527326000113
    DOI: 10.1016/j.ijpe.2026.109920
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    References listed on IDEAS

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