Department of Management

Managing service facilities with endogenous arrival and service rates

Research output: Contribution to journal/Conference contribution in journal/Contribution to newspaperJournal articleResearchpeer-review

DOI

  • Carlos A. Delgado-Alvarez, Politécnico Colombiano Jaime Isaza Cadavid
  • ,
  • Ann van Ackere, University of Lausanne
  • ,
  • Erik Reimer Larsen

We conduct a simulation-based experiment to analyze how past experiences in a service facility system affect customers' and service providers' behavior. We study the problem faced by service providers in deciding by how much to adjust the capacity of their facility when captive repeat customers choose which facility to join based on their expected sojourn times. The customers' decision-making process differs from that of service providers in that the former is based on the customers' experience, whereas the latter is based on the most recent information service providers have regarding demand. Customers use their previous experience and that of their neighbors to update their perceptions of the future average sojourn time, whereas service providers form perceptions of the future arrival rate. We use cellular automata to model the interaction between customers and service providers. We perform simulations to assess the way the customers' and service providers' decisions evolve and affect system behavior. Our findings demonstrate that the system we study possesses a certain degree of path dependence. The primary conclusion is that the more conservative service providers are regarding new information, the larger the market share they achieve, and the lower the probability that their facility will shut down.

Original languageEnglish
JournalInternational Transactions in Operational Research
Volume27
Issue2
Pages (from-to)1133-1161
Number of pages29
ISSN0969-6016
DOIs
Publication statusPublished - Mar 2020

    Research areas

  • Adaptive expectations, Cellular automata, Endogenous service and arrival rates, Queuing problems, CAPACITY, endogenous service and arrival rates, QUEUES, BEHAVIOR, CHARGES, MODEL, adaptive expectations, cellular automata, CHAOS, queuing problems

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