Capacity allocation in service systems with preferred delivery times and multiple customer classes

Melis Boran, Bahar Çavdar and Tuğçe Işık

IISE Transactions, 2024, vol. 56, issue 7, 762-776

Abstract: Motivated by operational problems in click-and-collect systems, such as curbside pickup programs, we study a joint admission control and capacity allocation problem. We consider systems where customers have preferred service delivery times and can be of different priority classes. The service provider can reject customers upon arrival or serve jobs via overtime when service capacity is insufficient. The service provider’s goal is to find the minimum-cost admission and capacity allocation policy to dynamically decide when to serve and whom to serve. We model this problem as a Markov Decision Process and present structural results to partially characterize suboptimal solutions. We then develop a linear programming-based exact solution method using these results. We also present a problem-specific approximation method using a new state aggregation rule to address computational challenges faced due to large state and action spaces. Finally, we develop heuristic policies for large instances based on the behavior of optimal policies in small problems. We evaluate our methods through extensive computational experiments where we vary the service capacity, arrivals, associated service costs, customer segmentation, and order patterns. Our solution methods perform significantly better than several benchmarks in managing the tradeoff between the computation time and solution quality.

Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/24725854.2023.2227666 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:uiiexx:v:56:y:2024:i:7:p:762-776

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/uiie20

DOI: 10.1080/24725854.2023.2227666

Access Statistics for this article

IISE Transactions is currently edited by Jianjun Shi

More articles in IISE Transactions from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().