When facing multiple classes of delay sensitive customers, how should a service firm make pricing decisions if it is unable to utilize discriminatory price? If the firm can use discriminatory price, then priority has been commonly used in optimizing a firm’s revenue function. In many applications, however, the firm cannot or is not allowed to discriminate customers and it has to make a uniform decision, such as sales price, to all its customers. How does the service firm make its decisions based on the knowledge of different classes of customers? We consider this problem with both the service firm is a monopoly or duopoly, and present the optimal strategy for the serviced firm. We show that the result can vary significantly, and the strategy depends on the range of system parameters. We report the result for each and every range of the system parameters. This is a joint work with Wenhui Zhou.
Biography: Xiuli Chao is professor Industrial and Operations Engineering at the University of Michigan, Ann Arbor. His research interests include queueing, scheduling, financial engineering, inventory control, and supply chain management. Chao is the co-developer of Lekin Scheduling System, and is the co-author of two books, “Operations Scheduling with Applications in Manufacturing and Services” (Irwin/McGraw-Hill, 1998), and ‘Queueing Networks: Customers, Signals, and Product Form Solutions” (John Wiley & Sons, 1999). Chao received the 1998 Wrlang Prize from the Applied Probability Society of INFORMS, and he received the Outstanding Young Scientist Award from National Natural Sciences in 2004, and the David F. Baker Distinguished Research Award from Institute of Industrial Engineers (IIE) in 2005. Chao received his doctoral degree in Operations Research from Columbia University.