Article ID Journal Published Year Pages File Type
478217 European Journal of Operational Research 2014 9 Pages PDF
Abstract

•We study a priority queueing system with free experience service.•We derive the expected waiting time of the informed customers.•We obtain an optimal strategy for the service firm.•We found some managerial insights for the service firm.

By providing a free experience service, a service firm can attract more uninformed customers. However, it could reversely effect the delay-sensitive, informed customers’ decision. In this paper, we study a priority queueing system with free experience services. We study the customer behavior in equilibrium after we derive the expected customer waiting time. We then construct the service firm’s revenue function and obtain an optimal strategy for the service firm. Our results suggest that when the market size of informed customers is relatively small, the firm should consider providing free experience services for uninformed customers. Conversely, if the demand rate of potential informed customers is quite high, the firm should ignore uninformed customers.

Related Topics
Physical Sciences and Engineering Computer Science Computer Science (General)
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