| Author: | Sumita, U. Masuda, Y. Yamakawa, S. |
| Title: | Optimal internal pricing and capacity planning for service facility with finite buffer |
| Journal: | European Journal of Operational Research
2001 : JAN 1, VOL. 128:1, p. 192-205 |
| Index terms: | PRICING OPTIMIZATION PLANNING SERVICE |
| Language: | eng |
| Abstract: | An economic model is developed for exploring optimal internal pricing and capacity planning for service facility with finite buffer capacity. Because of the limited buffer capacity, jobs finding the system full upon their arrival would be rejected. Such a rejections create a gap between the value collectively perceived by users and the actual achievement of the organizational value. This gap, called a loss externality, has never been studied before and plays an important role for designing optimal pricing scheme. In general, the underlining economic structure may involve multiple equilibria and it is unclear whether or not the system can be controlled through internal pricing. |
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