Consolidating or non-consolidating queues: A game theoretic queueing model with holding costs

• Published in: Operations research letters Vol. 39; no. 1; pp. 4 - 10
• Main Authors: Wee, Kwan-Eng, Iyer, Ananth
• Format: Journal Article
• Language: English
• Published: Oxford Elsevier B.V 2011; Elsevier
• Subjects: Allocations; Applied sciences; Consolidation; Costs; Demand; Exact sciences and technology; Game theory; Holding cost allocation; Incentives; Inventory control, production control. Distribution; Marketing; Nash equilibrium; Operational research and scientific management; Operational research. Management science; Operations research; Optimization; Queueing; Queues; Queuing theory. Traffic theory; Service rate; Queueing; Nash equilibrium; Service rate; Incentives; Holding cost allocation; Game theory; Processing time; Modeling; Minimum time; Time queue; Queueing system; Optimal allocation; Game equilibrium; Two server queue; Queue
• ISSN: 0167-6377; 1872-7468
• DOI: 10.1016/j.orl.2010.09.011

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.