Coordination of staffing and pricing decisions in a service firm
Date
2008
Authors
Serel, D. A.
Erel, E.
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Source Title
Applied Stochastic Models in Business and Industry
Print ISSN
1524-1904
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Publisher
John Wiley & Sons
Volume
24
Issue
4
Pages
307 - 323
Language
English
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Journal Title
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Abstract
Customer demand is sensitive to the price paid for the service in many service environments. Using queueing theory framework, we develop profit maximization models for jointly determining the price and the staffing level in a service company. The models include constraints on the average waiting time and the blocking probability. We show convexity of the single-variable subproblem under certain plausible assumptions on the demand and staffing cost functions. Using numerical examples, we investigate the sensitivity of the price and the staffing level to changes in the marginal service cost and the user-specified constraint on the congestion measure.
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Keywords
Erlang loss , Nonlinear programming , Optimal staffing level , Pricing , Queue , Waiting lines , Cost functions , Enterprise resource management , Game theory , Human resource management , Management science , Personnel selection , Queueing theory , Risk assessment , Average waiting time , Congestion measure , Customer demands , Erlang loss , Nonlinear programming , Numerical examples , Optimal staffing level , Pricing , Pricing decisions , Profit maximization , Queue , Service costs , Waiting lines , Blocking probability