Dynamic pricing and scheduling in a multi-class single-server queueing system

Authors:
Eren Başar Çil;Fikri Karaesmen;E. Lerzan Örmeci
Affiliations:
Decision Sciences Department, Lundquist College of Business, University of Oregon, Eugene, USA;Department of Industrial Engineering, Koç University, İstanbul, Turkey;Department of Industrial Engineering, Koç University, İstanbul, Turkey
Venue:
Queueing Systems: Theory and Applications
Year:
2011

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Abstract

This paper investigates an optimal sequencing and dynamic pricing problem for a two-class queueing system. Using a Markov Decision Process based model, we obtain structural characterizations of optimal policies. In particular, it is shown that the optimal pricing policy depends on the entire queue length vector but some monotonicity results prevail as the composition of this vector changes. A numerical study finds that static pricing policies may have significant suboptimality but simple dynamic pricing policies perform well in most situations.