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Optimal admission and pricing control problem with deterministic service times and sideline profit

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Abstract

We consider a discrete-time admission control problem in a company operating in service industries with two classes of customers. For the first class of customers, the company then (1) has an option to accept or reject him/her (admission control), or (2) decides on an offering price (pricing control). The second-class (sideline) customers are only served if no first-class customers are in the system, and this yields the sideline profit. In this paper, we discuss both admission control and pricing control problems within an identical framework, and we examine the properties of the optimal policies to maximize the total expected present discounted net profits. We show that when the sideline profit is large, the optimal policies may not be monotone in the number of first-class customers in the system.

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Authors and Affiliations

  1. Department of Industrial and Information Systems Engineering, Soongsil University, 511 Sangdo-dong, Dongjak-ku, Seoul, 156-743, Korea

    Jae-Dong Son

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  1. Jae-Dong Son
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Correspondence to Jae-Dong Son.

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This work was supported by the Soongsil University Research Fund.

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Son, JD. Optimal admission and pricing control problem with deterministic service times and sideline profit. Queueing Syst 60, 71–85 (2008). https://doi.org/10.1007/s11134-008-9087-4

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  • DOI: https://doi.org/10.1007/s11134-008-9087-4

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