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Staffing, Routing, and Payment to Trade off Speed and Quality in Large Service Systems

Zhan, D; (2019) Staffing, Routing, and Payment to Trade off Speed and Quality in Large Service Systems. Operations Research 10.1287/opre.2018.1838. (In press). Green open access

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Abstract

Most common queueing models used for service-system design assume that the servers work at fixed (possibly heterogeneous) rates. However, real-life service systems are staffed by people, and people may change their service speed in response to incentives. The delicacy is that the resulting service speed is jointly affected by staffing, routing, and payment decisions. Our objective in this paper is to find a joint staffing, routing, and payment policy that induces optimal service-system performance. We do this under the assumption that there is a trade-off between service speed and quality and that employees are paid based on both. The employees selfishly choose their own service speed to maximize their own expected utility (which depends on the staffing through their busy time). The endogenous service-rate assumption leads to a centralized control problem in which the system manager jointly optimizes over the staffing, routing, and service rate. By solving the centralized control problem under fluid scaling, we find four different economically optimal operating regimes: critically loaded, efficiency driven, quality driven, and intentional idling (in which there is simultaneous customer abandonment and server idling). Then we show that a simple piece-rate payment scheme can be used to solve the associated decentralized control problem under fluid scaling.

Type: Article
Title: Staffing, Routing, and Payment to Trade off Speed and Quality in Large Service Systems
Open access status: An open access version is available from UCL Discovery
DOI: 10.1287/opre.2018.1838
Publisher version: https://doi.org/10.1287/opre.2018.1838
Language: English
Additional information: This version is the author accepted manuscript. For information on re-use, please refer to the publisher’s terms and conditions.
Keywords: Service Operations; Queueing Games; Fluid Limits; Erlang-A; Strategic Servers
UCL classification: UCL
UCL > Provost and Vice Provost Offices > UCL BEAMS
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of Engineering Science
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of Engineering Science > UCL School of Management
URI: https://discovery.ucl.ac.uk/id/eprint/10074485
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