Speaker: Zhe George Zhang (Western Washington University, USA & Simon Fraser University, Canada)

Title: Information Effects on Performance of Two-tier Service Systems with Strategic Customers

Date: November 7, 2014

Time: 1:30 pm – 2:30 pm

Room: 4351 HP (Macphail room)

ABSTRACT: This talk considers a two-tier service system with one free service channel and one toll service channel. While the free system offers free service with a long waiting time, the toll service system offers paid service with a guaranteed maximum expected waiting time at a price. This kind of service system can be found in many public service situations. For example, for a certain type of non-emergency surgery, the free system may represent the public hospital service covered by the government medical insurance plan and accessed by all patients and the toll system may represent the private hospital service with limited number of patients admitted at any point in time. We study the information effects on the performance of such a two-tier service system with strategic customers. First we find that providing real-time delay information to customers can significantly improve the performances of both toll and free systems. Furthermore, we show that the system performance characteristics remain similar for both with real-time and without real-time delay information scenarios. The implication of this observation is that a system with real-time delay information can be approximately analyzed by a model without real -time delay information.

We also investigate the effects of the pricing and service guarantee on the performance of the two-tier service system and reveal that there is an inconsistency between the toll system’s profit goal and the customer service goal of the public service. This is a joint work with Hsing Luh of National Chengchi University, Taiwan.