Multiserver Loss Systems with Subscribers
Mathematics of Operations Research
Effects of system parameters on the optimal policy structure in a class of queueing control problems
Queueing Systems: Theory and Applications
Dynamic Capacity Management with Substitution
Operations Research
On determining optimal fleet size and vehicle transfer policy for a car rental company
Computers and Operations Research
Capacity Rationing in Stochastic Rental Systems with Advance Demand Information
Operations Research
Yield management of workforce for IT service providers
Decision Support Systems
A simple algebraic approximation to the Erlang loss system
Operations Research Letters
Admission control with batch arrivals
Operations Research Letters
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We consider the allocation of capacity in a system in which rental equipment is accessed by two classes of customers. We formulate the problem as a continuous-time analogue of the one-shot allocation problems found in the more traditional literature on revenue management, and we analyze a queueing control model that approximates its dynamics. Our investigation yields three sets of results. First, we use dynamic programming to characterize properties of optimal capacity allocation policies. We identify conditions under which "complete sharing"-in which both classes of customers have unlimited access to the rental fleet-is optimal. Next, we develop a computationally efficient "aggregate threshold" heuristic that is based on a fluid approximation of the original stochastic model. We obtain closed-form expressions for the heuristic's control parameters and show that the heuristic performs well in numerical experiments. The closed-form expressions also show that, in the context of the fluid approximation, revenues are concave and increasing in the fleet size. Finally, we consider the effect of the ability to allocate capacity on optimal fleet size. We show that the optimal fleet size under allocation policies may be lower, the same as, or higher than that under complete sharing. As capacity costs increase, allocation policies allow for larger relative fleet sizes. Numerical results show that, even in cases in which dollar profits under complete sharing may be close to those under allocation policies, the capacity reductions enabled by allocation schemes can help to lift profit margins significantly.