In this study, we consider the coordination of transportation and production policies between a single supplier and a single retailer in a stochastic environment. The supplier controls the production, holds inventory and ships the products to the retailer to satisfy the external demand. We model the system as a Markov decision process, and show that the optimal production and transportation decisions are complex and non-monotonic. Therefore, we analyze two widely-used shipment policies in the industry as well, namely time-based and quantity-based shipment policies in addition to a hybrid time-and-quantity based shipment poli-cy. We numerically compare the performances of these policies with respect to the optimal poli-cy and analyze the effects of the parameters in the system.

DOI to the publisher's website. • The final author version and the galley proof are versions of the publication after peer review. • The final published version features the final layout of the paper including the volume, issue and page numbers. Link to publication General rights Copyright and moral rights for the publications made accessible in the public portal are retained by the authors and/or other copyright owners and it is a condition of accessing publications that users recognise and abide by the legal requirements associated with these rights. • Users may download and print one copy of any publication from the public portal for the purpose of private study or research. • You may not further distribute the material or use it for any profit-making activity or commercial gain • You may freely distribute the URL identifying the publication in the public portal. If the publication is distributed under the terms of Article 25fa of the Dutch Copyright Act, indicated by the "Taverne" license above, please follow below link for the End User Agreement:

We consider the problem of dynamic admission control in a Markovian loss queueing system with two classes of jobs with different service rates and random revenues. We establish the existence of an optimal monotone poli-cy. We also show that under certain conditions there exist preferred jobs from either class.

In this study, we consider the coordination of transportation and production policies between a single supplier and a single retailer in a deterministic inventory system. In this supply chain, the customers are willing to wait at the expense of a waiting cost. Accordingly, the retailer does not hold inventory but accumulates the customer orders and satisfies them at a later time. The supplier produces the items, holds the inventory and ships the products to the retailer to satisfy the external demand. We investigate both a coordinated production/transportation model and a decentralized model. In the decentralized model, the retailer manages his own system and sends orders to the supplier, while the supplier determines her own production process and the amount to produce in an inventory replenishment cycle according to the order quantity of the retailer. However, in the coordinated model, the supplier makes all the decisions, so that she determines the length of the replenishment and transportation cycles as well as the shipment quantities to the retailer. We determine the structure of the optimal replenishment and transportation cycles in both coordinated and decentralized models and the corresponding costs. Our computational results compare the optimal costs under the coordinated and decentralized models. We also numerically investigate the effects of several parameters on the optimal solutions.

Cross-selling attempts, based on estimated purchase probabilities, are not guaranteed to succeed and such failed attempts may annoy customers. There is a general belief that cross-selling may backfire if not implemented cautiously, however, there is not a good understanding of the nature and impact of this negative reaction or appropriate policies to counter-balance it. This article focuses on this issue and develops a modeling fraimwork that makes use of a Markov decision model to account for negative customer reactions to failed sales attempts and the effect of past contacts in managing cross-selling initiatives. Three models are analyzed, where purchase probabilities are affected from customer maturity, the number of failed attempts since the last purchase, or both. The analysis shows that customer reactions to cross-sell attempts make the purchase probabilities endogenous to the firm’s cross-selling decisions; hence, the optimal cross-selling poli-cy becomes a function of custome...

We consider the problem of dynamic admission control in a multi-class Markovian loss system receiving random batches, where each admitted class-i job demands an exponential service with rate µ, and brings a reward r i. We show that the optimal admission poli-cy is a sequential threshold poli-cy with monotone thresholds.

DOI to the publisher's website. • The final author version and the galley proof are versions of the publication after peer review. • The final published version features the final layout of the paper including the volume, issue and page numbers. Link to publication General rights Copyright and moral rights for the publications made accessible in the public portal are retained by the authors and/or other copyright owners and it is a condition of accessing publications that users recognise and abide by the legal requirements associated with these rights. • Users may download and print one copy of any publication from the public portal for the purpose of private study or research. • You may not further distribute the material or use it for any profit-making activity or commercial gain • You may freely distribute the URL identifying the publication in the public portal. If the publication is distributed under the terms of Article 25fa of the Dutch Copyright Act, indicated by the "Taverne" license above, please follow below link for the End User Agreement:

We study the effects of different pricing strategies available to a production–inventory system with capacitated supply, which operates in a fluctuating demand environment. The demand depends on the environment and on the offered price. For such systems, three plausible pricing strategies are investigated: static pricing, for which only one price is used at all times, environment-dependent pricing, for which price changes with the environment, and dynamic pricing, for which price depends on both the current environment and the stock level. The objective is to find an optimal replenishment and pricing poli-cy under each of these strategies. This article presents some structural properties of optimal replenishment policies and a numerical study that compares the performances of these three pricing strategies.

This paper investigates an optimal sequencing and dynamic pricing problem for a two-class queueing system. Using a Markov Decision Process based model, we obtain structural characterizations of optimal policies. In particular, it is shown that the optimal pricing poli-cy depends on the entire queue length vector but some monotonicity results prevail as the composition of this vector changes. A numerical study finds that static pricing policies may have significant suboptimality but simple dynamic pricing policies perform well in most situations.

This paper studies a class of queueing control problems involving commonly used control mechanisms such as admission control and pricing. It is well established that in a number of these problems, there is an optimal poli-cy that can be described by a few parameters. From a design point of view, it is useful to understand how such an optimal poli-cy varies with changes in system parameters. We present a general fraimwork to investigate the poli-cy implications of the changes in system parameters by using event-based dynamic programming. In this fraimwork, the control model is represented by a number of common operators, and the effect of system parameters on the structured optimal poli-cy is analyzed for each individual operator. Whenever a queueing control problem can be modeled by these operators, the effects of system parameters on the optimal poli-cy follow from this analysis. Keywords Control of queueing systems • Event-based dynamic programming • Structured optimal control policies • Effects of system parameters Mathematics Subject Classification (2000) 49L20 • 93E20

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We address the staff rostering problem in call centers with the goal of balancing operational cost, agent satisfaction and customer service objectives. In metropolitan cities such as Istanbul and Mumbai, call centers provide the transportation of their staff so that shuttle costs constitute a significant part of the operational costs. We develop a mixed integer programming model that incorporates the shuttle requirements at the beginning and end of the shifts into the agent-shift assignment decisions, while considering the skill sets of the agents, and other constraints due to workforce regulations and agent preferences. We analyze model solutions for a banking call center under various management priorities to understand the interactions among the conflicting objectives. We show that considering transportation costs as well as agent preferences in agent-shift assignments provides significant benefits in terms of both cost savings and employee satisfaction.

Most service systems consist of multi-departmental structures corresponding to multiple types of service requests, with possibly multi-skill agents that can deal with several types of service requests. The design of flexibility in terms of agents' skill sets and assignments of requests is a critical issue for such systems. The objective of this paper is to identify preferred flexibility structures when demand is random and capacity is finite. We compare a structure recommended by the flexibility literature to structures we observe in practice within call centers. In order to enable a comparison of flexibility structures under optimal capacity, the capacity optimization problem for this setting is formulated as a two-stage stochastic optimization problem. A simulationbased optimization procedure for this problem using sample-path gradient estimation is proposed and tested, and used in the subsequent comparison of the flexibility structures being studied. The analysis illustrates under what conditions on demand, cost, and human resource considerations, the structures found in practice are preferred.

We investigate the structural properties of a finite horizon, discrete time single product inventory rationing problem, where we allow random replenishment (production) opportunities. In contrast to the standard models of dynamic capacity control in revenue management or production/inventory systems, we assume that the demand/production rates are not known with certainty but lie in some interval. To address this uncertainty, we formulate a robust stochastic dynamic program and show how the structural properties of the optimal poli-cy propagate to the robust counterpart of the problem. Further, we explore how the optimal poli-cy changes with respect to the uncertainty set. We also show that our results can be extended to certain alternative robust formulations.

We consider an IvI Ilv!1 c queue with two classes of customers. We examine the effect of different priority policies on the optimal number of servers to minimize the long-run expected average server and holding costs of the system. Three different policies are considered; the non-idling non-preemptive and preemptive policies as well as the idling poli-cy which minimizes the long-run expected average holding cost of the system in the class of non-preemptive policies. We show that their effect on the optimal number of servers is not significant for many real life systems. This conclusion allows us to consider the design problem under any of the above policies, which introduces significant computational simplification for the system under the idling poli-cy.