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Service-Level Agreements in Call Centers: Perils and Prescriptions

Author

Listed:
  • Joseph M. Milner

    () (Joseph L. Rotman School of Management, University of Toronto, Toronto, Ontario M5S 3E6, Canada)

  • Tava Lennon Olsen

    () (John M. Olin School of Business, Washington University in St. Louis, St. Louis, Missouri 63130)

Abstract

Acall center with both contract and noncontract customers was giving priority to the contract customers only in off-peak hours, precisely when having priority was least important. In this paper, we investigate whether this is rational behavior on the part of the call center and what the implications are for customers. In particular, we show that under contracts on the percentile of delay, which are commonly used in the call center industry, this is rational behavior, at least under the approximating asymptotic regime considered in this paper. We then suggest other contracts that do not result in this type of undesirable behavior from a contract customer's perspective. We compare the performance of the different contracts in terms of mean, variance, and outer percentiles of delay for both customer types using both numerical and asymptotic heavy-traffic analyses. We argue that including terms reflecting the second moment of delay in a contract would be beneficial to contract customers and, in a sense, fairer.

Suggested Citation

  • Joseph M. Milner & Tava Lennon Olsen, 2008. "Service-Level Agreements in Call Centers: Perils and Prescriptions," Management Science, INFORMS, vol. 54(2), pages 238-252, February.
  • Handle: RePEc:inm:ormnsc:v:54:y:2008:i:2:p:238-252
    DOI: 10.1287/mnsc.1070.0777
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    File URL: http://dx.doi.org/10.1287/mnsc.1070.0777
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    References listed on IDEAS

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    1. Noah Gans & Ger Koole & Avishai Mandelbaum, 2003. "Telephone Call Centers: Tutorial, Review, and Research Prospects," Manufacturing & Service Operations Management, INFORMS, vol. 5(2), pages 79-141, September.
    2. O. Zeynep Akc{s}in & Francis de VĂ©ricourt & Fikri Karaesmen, 2008. "Call Center Outsourcing Contract Analysis and Choice," Management Science, INFORMS, vol. 54(2), pages 354-368, February.
    3. Armony, Mor & Haviv, Moshe, 2003. "Price and delay competition between two service providers," European Journal of Operational Research, Elsevier, vol. 147(1), pages 32-50, May.
    4. Rodney B. Wallace & Ward Whitt, 2005. "A Staffing Algorithm for Call Centers with Skill-Based Routing," Manufacturing & Service Operations Management, INFORMS, vol. 7(4), pages 276-294, August.
    5. Maglaras, Constantinos & Van Mieghem, Jan A., 2005. "Queueing systems with leadtime constraints: A fluid-model approach for admission and sequencing control," European Journal of Operational Research, Elsevier, vol. 167(1), pages 179-207, November.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. repec:eee:ijrema:v:31:y:2014:i:3:p:280-292 is not listed on IDEAS
    2. Robbins, Thomas R. & Harrison, Terry P., 2010. "A stochastic programming model for scheduling call centers with global Service Level Agreements," European Journal of Operational Research, Elsevier, vol. 207(3), pages 1608-1619, December.
    3. Jouini, Oualid & Pot, Auke & Koole, Ger & Dallery, Yves, 2010. "Online scheduling policies for multiclass call centers with impatient customers," European Journal of Operational Research, Elsevier, vol. 207(1), pages 258-268, November.
    4. O. Zeynep Akc{s}in & Francis de VĂ©ricourt & Fikri Karaesmen, 2008. "Call Center Outsourcing Contract Analysis and Choice," Management Science, INFORMS, vol. 54(2), pages 354-368, February.
    5. Benaroch, Michel & Webster, Scott & Kazaz, Burak, 2012. "Impact of sourcing flexibility on the outsourcing of services under demand uncertainty," European Journal of Operational Research, Elsevier, vol. 219(2), pages 272-283.
    6. Sang-Hyun Kim & Morris A. Cohen & Serguei Netessine & Senthil Veeraraghavan, 2010. "Contracting for Infrequent Restoration and Recovery of Mission-Critical Systems," Management Science, INFORMS, vol. 56(9), pages 1551-1567, September.
    7. repec:eee:ejores:v:272:y:2019:i:1:p:313-323 is not listed on IDEAS
    8. Opher Baron & Joseph Milner, 2009. "Staffing to Maximize Profit for Call Centers with Alternate Service-Level Agreements," Operations Research, INFORMS, vol. 57(3), pages 685-700, June.
    9. Itay Gurvich & Mor Armony & Avishai Mandelbaum, 2008. "Service-Level Differentiation in Call Centers with Fully Flexible Servers," Management Science, INFORMS, vol. 54(2), pages 279-294, February.
    10. Wyean Chan & Ger Koole & Pierre L'Ecuyer, 2014. "Dynamic Call Center Routing Policies Using Call Waiting and Agent Idle Times," Manufacturing & Service Operations Management, INFORMS, vol. 16(4), pages 544-560, October.
    11. repec:pal:jorsoc:v:68:y:2017:i:6:d:10.1057_s41274-016-0111-5 is not listed on IDEAS
    12. Mustafa Akan & Bar{i}c{s} Ata & Martin A. Lariviere, 2011. "Asymmetric Information and Economies of Scale in Service Contracting," Manufacturing & Service Operations Management, INFORMS, vol. 13(1), pages 58-72, September.
    13. Christopher Dance & Alexei Gaivoronski, 2012. "Stochastic optimization for real time service capacity allocation under random service demand," Annals of Operations Research, Springer, vol. 193(1), pages 221-253, March.

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