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A base-stock inventory model with service differentiation and response time guarantees

Gabor, Adriana F.; van Vianen, Lars A.; Yang, Guangyuan and Axsäter, Sven LU (2018) In European Journal of Operational Research 269(3). p.900-908
Abstract

In response to customer specific service time guarantee requirements, service providers can offer differentiated services. Although response time agreements offer more flexibility, most of the theoretical models for customer differentiation are based on fill rates, due to the difficulty of calculating the response time distribution in the presence of priorities. In this paper we focus on the (S−1,S,K) model with two customer classes, in which low priority customers are served only if the inventory level is above K. For this model, we derive the exact distribution of the response time (within lead time) for the lower priority class and provide a new closed-form approximation for the fill rate for high priority customers. Via numerical... (More)

In response to customer specific service time guarantee requirements, service providers can offer differentiated services. Although response time agreements offer more flexibility, most of the theoretical models for customer differentiation are based on fill rates, due to the difficulty of calculating the response time distribution in the presence of priorities. In this paper we focus on the (S−1,S,K) model with two customer classes, in which low priority customers are served only if the inventory level is above K. For this model, we derive the exact distribution of the response time (within lead time) for the lower priority class and provide a new closed-form approximation for the fill rate for high priority customers. Via numerical experiments, we show that the fill rate approximation performs comparable to the best approximations in the literature, while its implementation requires only elementary operations.

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Please use this url to cite or link to this publication:
author
organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
Inventory, Queueing, Response time, Service differentiation
in
European Journal of Operational Research
volume
269
issue
3
pages
900 - 908
publisher
Elsevier
external identifiers
  • scopus:85044324148
ISSN
0377-2217
DOI
10.1016/j.ejor.2018.02.039
language
English
LU publication?
yes
id
61c3deda-3df1-414a-b3d9-9382b6e039e4
date added to LUP
2018-04-10 06:54:05
date last changed
2019-03-19 03:52:34
@article{61c3deda-3df1-414a-b3d9-9382b6e039e4,
  abstract     = {<p>In response to customer specific service time guarantee requirements, service providers can offer differentiated services. Although response time agreements offer more flexibility, most of the theoretical models for customer differentiation are based on fill rates, due to the difficulty of calculating the response time distribution in the presence of priorities. In this paper we focus on the (S−1,S,K) model with two customer classes, in which low priority customers are served only if the inventory level is above K. For this model, we derive the exact distribution of the response time (within lead time) for the lower priority class and provide a new closed-form approximation for the fill rate for high priority customers. Via numerical experiments, we show that the fill rate approximation performs comparable to the best approximations in the literature, while its implementation requires only elementary operations.</p>},
  author       = {Gabor, Adriana F. and van Vianen, Lars A. and Yang, Guangyuan and Axsäter, Sven},
  issn         = {0377-2217},
  keyword      = {Inventory,Queueing,Response time,Service differentiation},
  language     = {eng},
  month        = {03},
  number       = {3},
  pages        = {900--908},
  publisher    = {Elsevier},
  series       = {European Journal of Operational Research},
  title        = {A base-stock inventory model with service differentiation and response time guarantees},
  url          = {http://dx.doi.org/10.1016/j.ejor.2018.02.039},
  volume       = {269},
  year         = {2018},
}