Comparison of socially optimal and profit maximizing prices in an unobservable queue with heterogeneous waiting costs

Bara Kim, Jeongsim Kim

Research output: Contribution to journalArticlepeer-review

Abstract

We consider a general unobservable queueing model in which customers are allowed to join or balk upon arrival. The service provider charges the same admission fee to all joining customers. All joining customers receive the same reward and incur heterogeneous waiting cost rates. We show that the socially optimal arrival rate is greater than or equal to the profit maximizing arrival rate. Equivalently, the socially optimal admission fee is smaller than or equal to the profit maximizing admission fee.

Original languageEnglish
Pages (from-to)207-211
Number of pages5
JournalOperations Research Letters
Volume49
Issue number2
DOIs
Publication statusPublished - 2021 Mar

Keywords

  • Optimal arrival rate
  • Optimal price
  • Unobservable queue

ASJC Scopus subject areas

  • Software
  • Management Science and Operations Research
  • Industrial and Manufacturing Engineering
  • Applied Mathematics

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