Consolidating or Non-consolidating Queues: A Game Theoretic Queuing Model with Holding Costs

• Main Authors: WEE, Kwan Eng, IYER, Ananth
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2011
• Subjects: Holding cost allocation; Nash equilibrium; Queueing; Service rate; Incentives; Game theory; Operations and Supply Chain Management
• Online Access: https://ink.library.smu.edu.sg/lkcsb_research/3208; https://ink.library.smu.edu.sg/context/lkcsb_research/article/4207/viewcontent/ORLetters39_1_4_10.pdf
• Institution: Singapore Management University

We consider a two-server queueing system in which the servers choose their service rate based on the demand and holding cost allocation scheme offered by the demand generating entity. We provide an optimal holding cost allocation scheme that leads to the maximum possible service rate for each of a pooled and a split system. Our results suggest that careful allocation of holding costs can create incentives that enable minimum turnaround times using a common queue.