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

Authors:
Kwan-Eng Wee;Ananth Iyer
Affiliations:
Lee Kong Chian School of Business, Singapore Management University, 50 Stamford Road, Singapore 178899, Singapore;Krannert School of Management, Purdue University, West Lafayette, IN 47907, USA
Venue:
Operations Research Letters
Year:
2011

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Abstract

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.