The effect of catastrophes on the strategic customer behavior in queueing systems

Olga Boudali and Antonis Economou

Naval Research Logistics (NRL), 2013, vol. 60, issue 7, 571-587

Abstract: We consider the single server Markovian queue subject to Poisson generated catastrophes. Whenever a catastrophe occurs, all customers are forced to abandon the system, the server is rendered inoperative and an exponential repair time is set on. During the repair time new arrivals are allowed to join the system. We assume that the arriving customers decide whether to join the system or balk, based on a natural linear reward‐cost structure with two types of rewards: A (usual) service reward for those customers that receive service and a (compensation) failure reward for those customers that are forced to abandon the system due to a catastrophe. We study the strategic behavior of the customers regarding balking and derive the corresponding (Nash) equilibrium strategies for the observable and unobservable cases. We show that both types of strategic behavior may be optimal: to avoid the crowd or to follow it. The crucial factor that determines the type of customer behavior is the relative value of the service reward to the failure compensation. © 2013 Wiley Periodicals, Inc. Naval Research Logistics, 2013

Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:wly:navres:v:60:y:2013:i:7:p:571-587

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