Managing Customer Expectations and Priorities in Service Systems

We study how to use delay announcements to manage customer expectations while allowing the firm to prioritize among customers with different sensitivities to time and value. We examine this problem by developing a framework which characterizes the strategic interaction between the firm and heterogeneous customers. When the firm has information about the state of the system, yet lacks information on customer types, delay announcements play a dual role: they inform customers about the state of the system, while they also have the potential to elicit information on customer types based on their response to the announcements. The tension between these two goals has implications to the type of information that can be shared credibly. To explore the value of the information on customer types, we also study a model where the firm can observe customer types. We show that having information on the customer type may improve or hurt the credibility of the firm. While the creation of credibility increases the firm's profit, the loss of credibility does not necessarily hurt its profit.

[1]  P. Naor.  The Regulation of Queue Size by Levying Tolls , 1969 .

[2]  Carri W. Chan,et al.  Prioritizing Burn-Injured Patients During a Disaster , 2013, Manuf. Serv. Oper. Manag..

[3]  Martin L. Puterman,et al.  Markov Decision Processes: Discrete Stochastic Dynamic Programming , 1994 .

[4]  K. Hinderer,et al.  Foundations of Non-stationary Dynamic Programming with Discrete Time Parameter , 1970 .

[5]  Ward Whitt,et al.  Real-Time Delay Estimation in Overloaded Multiserver Queues with Abandonments , 2009, Manag. Sci..

[6]  Refael Hassin.  Consumer Information in Markets with Random Product Quality: The Case of Queues and Balking , 1986 .

[7]  Gad Allon,et al.  How Do Delay Announcements Shape Customer Behavior? An Empirical Study , 2014, Manag. Sci..

[8]  E. Altman.  Constrained Markov Decision Processes , 1999 .

[9]  J. Sobel,et al.  STRATEGIC INFORMATION TRANSMISSION , 1982 .

[10]  Pengfei Guo,et al.  Analysis and Comparison of Queues with Different Levels of Delay Information , 2007, Manag. Sci..

[11]  Linn I. Sennott,et al.  COMPUTING AVERAGE OPTIMAL CONSTRAINED POLICIES IN STOCHASTIC DYNAMIC PROGRAMMING , 2001, Probability in the Engineering and Informational Sciences.

[12]  Wayne E. Smith.  Various optimizers for single‐stage production , 1956 .

[13]  Ward Whitt,et al.  The Impact of Delay Announcements in Many-Server Queues with Abandonment , 2009, Oper. Res..

[14]  Serhan Ziya,et al.  Priority Assignment Under Imperfect Information on Customer Type Identities , 2009, Manuf. Serv. Oper. Manag..

[15]  V. Kulkarni,et al.  Individual, Class-Based, and Social Optimal Admission Policies in Two-Priority Queues , 2007 .

[16]  Dimitri P. Bertsekas,et al.  Dynamic Programming and Optimal Control, Vol. II , 1976 .

[17]  W. Whitt,et al.  Improving Service by Informing Customers About Anticipated Delays , 1999 .

[18]  Jr. Shaler Stidham.  Optimal control of admission to a queueing system , 1985 .

[19]  Noah Gans,et al.  A Call-Routing Problem with Service-Level Constraints , 2003, Oper. Res..

[20]  Yang Li,et al.  Efficient Ignorance: Information Heterogeneity in a Queue , 2016 .

[21]  Avishai Mandelbaum,et al.  Data-stories about (im)patient customers in tele-queues , 2013, Queueing Syst. Theory Appl..

[22]  Itay Gurvich,et al.  "We Will Be Right with You": Managing Customer Expectations with Vague Promises and Cheap Talk , 2011, Oper. Res..

[23]  Haim Mendelson,et al.  Optimal Incentive-Compatible Priority Pricing for the M/M/1 Queue , 1990, Oper. Res..

[24]  Yves Dallery,et al.  Call Center Delay Announcement Using a Newsvendor-Like Performance Criterion , 2015 .

[25]  D. Simchi-Levi,et al.  Optimal Production and Admission Policies in Make‐to‐Stock/Make‐to‐Order Manufacturing Systems , 2012 .

[26]  Niels Chr. Knudsen.  Individual and Social Optimization in a Multiserver Queue with a General Cost-Benefit Structure , 1972 .

[27]  Dimitri P. Bertsekas,et al.  Dynamic Programming and Optimal Control, Two Volume Set , 1995 .

[28]  Izak Duenyas,et al.  Optimal Admission Control and Sequencing in a Make-to-Stock/Make-to-Order Production System , 2000, Oper. Res..

[29]  Avishai Mandelbaum,et al.  Statistical Analysis of a Telephone Call Center , 2005 .

[30]  F. Beutler,et al.  Optimal policies for controlled markov chains with a constraint , 1985 .

[31]  Philipp Afèche,et al.  Incentive-Compatible Revenue Management in Queueing Systems: Optimal Strategic Delay , 2013, Manuf. Serv. Oper. Manag..

[32]  Matthew Rosenshine,et al.  Optimal control for entry of many classes of customers to an M/M/1 queue , 1981 .