Pricing and inventory control in a multi-class queueing system

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Güler M. G., Bilgiç T., Güllü A. R.

4th World Conference P&OM , Amsterdam, Netherlands, 1 - 05 July 2012, pp.111-122

  • Publication Type: Conference Paper / Full Text
  • City: Amsterdam
  • Country: Netherlands
  • Page Numbers: pp.111-122
  • Yıldız Technical University Affiliated: No


We consider the joint pricing and inventory problem of a capacity constrained service facility.

There are several classes of customers who are delay sensitive. We model the problem with

an M/M/1 queueing system with non-preemptive priorities. We approximate the problem and

give closed form solutions for the inventory decisions. We also provide simple and explicit

solutions when there is a single customer type. We also show that the price given by the first

order conditions are incentive compatible in the sense that they optimize the profit of the service

facility even if it does not have any information about an arriving customer and let the

customer choose a price from the menu of prices.