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Managing Service Systems with an Offline Waiting Option and Customer Abandonment

Author

Listed:
  • Vasiliki Kostami

    () (Information and Operations Management, Marshall School of Business, University of Southern California, Los Angeles, California 90089)

  • Amy R. Ward

    () (Information and Operations Management, Marshall School of Business, University of Southern California, Los Angeles, California 90089)

Abstract

Many service providers offer customers the choice of either waiting in a line or going offline and returning at a dynamically determined future time. The best-known example is the FASTPASS ® system at Disneyland. To operate such a system, the service provider must make an upfront decision on how to allocate service capacity between the two lines. Then, during system operation, he must provide estimates of the waiting times for both lines to each arriving customer. The estimation of offline waiting times is complicated by the fact that some offline customers do not return for service at their appointed time. We show that when demand is large and service is fast, for any fixed-capacity allocation decision, the two-dimensional process tracking the number of customers waiting in a line and offline collapses to one dimension, and we characterize the one-dimensional limit process as a reflected diffusion with linear drift. The analytic tractability of this one-dimensional limit process allows us to solve for the capacity allocation that minimizes average cost when there are costs associated with customer abandonments and queueing. We further show that in this limit regime, a simple scheme based on Little's Law to dynamically estimate in line and offline wait times is effective.

Suggested Citation

  • Vasiliki Kostami & Amy R. Ward, 2009. "Managing Service Systems with an Offline Waiting Option and Customer Abandonment," Manufacturing & Service Operations Management, INFORMS, vol. 11(4), pages 644-656, November.
  • Handle: RePEc:inm:ormsom:v:11:y:2009:i:4:p:644-656
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    File URL: http://dx.doi.org/10.1287/msom.1080.0244
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    References listed on IDEAS

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    1. Ward Whitt, 1999. "Improving Service by Informing Customers About Anticipated Delays," Management Science, INFORMS, vol. 45(2), pages 192-207, February.
    2. Walter Y. Oi, 1971. "A Disneyland Dilemma: Two-Part Tariffs for a Mickey Mouse Monopoly," The Quarterly Journal of Economics, Oxford University Press, vol. 85(1), pages 77-96.
    3. Ali K. Parlaktürk & Sunil Kumar, 2004. "Self-Interested Routing in Queueing Networks," Management Science, INFORMS, vol. 50(7), pages 949-966, July.
    4. Parlakturk, Ali & Kumar, Sunil, 2004. "Self-Interested Routing in Queueing Networks," Research Papers 1782r, Stanford University, Graduate School of Business.
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    1. repec:spr:queues:v:87:y:2017:i:1:d:10.1007_s11134-017-9538-x is not listed on IDEAS

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