The pooling principle

A key insight of basic inventory models and of the G/G/m queueing model is the effect of “pooling.” That is, these models suggest that pooling of customer demands, along with pooling of the resources used to fill those demands, may yield operational improvements. While there are many research papers that articulate and quantify the benefits of pooling, a review of popular texts in operations management suggests that most texts lack simple examples that illustrate this important concept. This note is intended to fill this void by articulating the “pooling principle” in an intuitive, straightforward fashion. This note is comprised of a brief instructor's note, followed by a note that can be included in a course pack or handed out to students. Earlier versions of the note have been used successfully in core operations courses at both the undergraduate business and MBA levels.