Comparing two socially optimal work allocation rules when having a profit optimizing subcontractor with ample capacity

Christian Larsen ()

Mathematical Methods of Operations Research, 2005, vol. 61, issue 1, 109-121

Abstract: We study a service system modelled as a single server queuing system where request for service either can be processed at the service system or by a subcontractor. In the former case the customer is incurred waiting costs but the service is free, while in the latter case the customer must pay for the service but there is no waiting time, hence no waiting costs. Under the premises that the subcontractor prices his services in order to maximize his profit, we study two work allocation rules, which given the price of subcontractor seek to allocate work such that the costs of the customers are minimized. The two work allocation rules are characterized by one being centralized and randomized while the other is decentralized and deterministic. From the subcontractors point of view the latter is preferred and under this rule he receives lesser requests but can charge a higher price compared to the former. We also show that from the customers point view, any of the two work allocation rules are to be preferred compared to the base case where there are no subcontractor. Copyright Springer-Verlag 2005

Keywords: Queuing models; Information policies; Pricing of subcontracting; Control policies (search for similar items in EconPapers)
Date: 2005
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://hdl.handle.net/10.1007/s001860400389 (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:spr:mathme:v:61:y:2005:i:1:p:109-121

Ordering information: This journal article can be ordered from
http://www.springer.com/economics/journal/00186

DOI: 10.1007/s001860400389

Access Statistics for this article

Mathematical Methods of Operations Research is currently edited by Oliver Stein

More articles in Mathematical Methods of Operations Research from Springer, Gesellschaft für Operations Research (GOR), Nederlands Genootschap voor Besliskunde (NGB)
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().