Article ID: | iaor1996840 |
Country: | Netherlands |
Volume: | 40 |
Issue: | 1 |
Start Page Number: | 89 |
End Page Number: | 100 |
Publication Date: | Jun 1995 |
Journal: | International Journal of Production Economics |
Authors: | Ackere Ann van |
Keywords: | capacity planning |
A queueing model is used to analyse the interrelation between system performance, pricing strategy and information. Two input control methods are studied: a club approach (controlling the expected arrival rate) and a free-entry system (controlling the maximum backlog), where a new customer may or may not be able to observe the existing backlog. The club approach generally leads to higher prices, lower utilization and lower profit. Under the free-entry system customers are better off if they can observe the backlog, but society as a whole is worse off. If there is a shortage of customers, the club approach becomes more attractive, as customers must per-commit.