Managing Priorities on Service Platforms with Waiting Time Differentiation
(2022) 32nd EURO Conference — Location: Helsinki, Finland (3.July.2022)
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- Authors
De Munck, Thomas 
- et. al.
- Abstract
- Motivated by recent applications, we consider the problem of an ondemand service platform (e.g., Uber, Deliveroo) that provides two service options to two customer classes with distinct willingness to wait and to pay. Upon arrival, customers can be admitted or rejected to the system, and, at each moment, service providers can be allocated to admitted customers or reserved for future high-priority customers. We formulate this problem as a continuous-time Markov decision process and use it to find an optimal policy on customer admission and service provider allocation. Exploiting structural properties of the value function, we analytically show that the optimal policy is described by state-dependent admission thresholds for the two customers classes. In a numerical study, we then compare the performance of the optimal policy with several simpler policies. We find that jointly controlling the customer admissions and the service provider allocation enables the system to reach lower costs and operate optimally over an extensive range of system parameters. In addition, the optimal policy also improves customer welfare.
- Affiliations
Citations
De Munck, T., Chevalier, P., Tancrez, J.-S., & et al. (2022). Managing Priorities on Service Platforms with Waiting Time Differentiation. 32nd EURO Conference, Helsinki, Finland. https://hdl.handle.net/2078.5/26634