Equilibrium Strategies in M/M/1 Priority Queues with Balking1. Issue 1 (10th June 2018)
- Record Type:
- Journal Article
- Title:
- Equilibrium Strategies in M/M/1 Priority Queues with Balking1. Issue 1 (10th June 2018)
- Main Title:
- Equilibrium Strategies in M/M/1 Priority Queues with Balking1
- Authors:
- Wang, Jinting
Cui, Shiliang
Wang, Zhongbin - Abstract:
- Abstract : We consider an M / M /1 queueing system with a pay‐for‐priority option, and study customers' joint decisions between joining/balking and pay‐for‐priority. The equilibrium strategies are thus two‐dimensional. First, we fully characterize the equilibrium structure and identify the Pareto‐dominant strategies of such a game analytically, under both the observable and unobservable settings. Interestingly, the equilibrium structure, the system throughput, and the service provider's optimal price for priority premium can all be non‐monotone in the service reward, which departs from the existing models of priority queues without balking. In particular, we find that an increase in service reward can actually hurt the firm's revenue (everything else being equal). Second, we compare the server's revenue between the observable and the unobservable settings. We find that the service provider is better off with the observable setting when the system load is either low or high, but benefits more from the unobservable setting when the system load is medium. The fact that the optimal setting switches twice as the system load increases, is rather interesting; we explain the intuitions behind it in this study. Finally, we demonstrate the implications of these findings by applying our model framework to Papa John's Pizza, based on publicly available information. Our analysis suggests that Papa John's could benefit from prviding customers with wait information while slightlyAbstract : We consider an M / M /1 queueing system with a pay‐for‐priority option, and study customers' joint decisions between joining/balking and pay‐for‐priority. The equilibrium strategies are thus two‐dimensional. First, we fully characterize the equilibrium structure and identify the Pareto‐dominant strategies of such a game analytically, under both the observable and unobservable settings. Interestingly, the equilibrium structure, the system throughput, and the service provider's optimal price for priority premium can all be non‐monotone in the service reward, which departs from the existing models of priority queues without balking. In particular, we find that an increase in service reward can actually hurt the firm's revenue (everything else being equal). Second, we compare the server's revenue between the observable and the unobservable settings. We find that the service provider is better off with the observable setting when the system load is either low or high, but benefits more from the unobservable setting when the system load is medium. The fact that the optimal setting switches twice as the system load increases, is rather interesting; we explain the intuitions behind it in this study. Finally, we demonstrate the implications of these findings by applying our model framework to Papa John's Pizza, based on publicly available information. Our analysis suggests that Papa John's could benefit from prviding customers with wait information while slightly decreasing its fee for Papa Priority. … (more)
- Is Part Of:
- Production and operations management. Volume 28:Issue 1(2019)
- Journal:
- Production and operations management
- Issue:
- Volume 28:Issue 1(2019)
- Issue Display:
- Volume 28, Issue 1 (2019)
- Year:
- 2019
- Volume:
- 28
- Issue:
- 1
- Issue Sort Value:
- 2019-0028-0001-0000
- Page Start:
- 43
- Page End:
- 62
- Publication Date:
- 2018-06-10
- Subjects:
- M/M/1 queues -- priorities -- balking -- pareto‐dominant equilibrium -- pricing
Production management -- Periodicals
658.505 - Journal URLs:
- http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1937-5956 ↗
http://www.poms.org/journal ↗
http://www3.interscience.wiley.com/journal/121568272/home ↗
http://onlinelibrary.wiley.com/ ↗
http://www.umi.com/pqdauto/ ↗ - DOI:
- 10.1111/poms.12889 ↗
- Languages:
- English
- ISSNs:
- 1059-1478
- Deposit Type:
- Legaldeposit
- View Content:
- Available online (eLD content is only available in our Reading Rooms) ↗
- Physical Locations:
- British Library DSC - 6853.076600
British Library DSC - BLDSS-3PM
British Library STI - ELD Digital store - Ingest File:
- 9370.xml