Abstract

http://ssrn.com/abstract=2336514
 


 



Staffing Service Systems When Capacity Has a Mind of Its Own


Itay Gurvich


Northwestern University

Martin Lariviere


Northwestern University - Kellogg School of Management

Antonio Moreno


Northwestern University - Department of Managerial Economics and Decision Sciences (MEDS)

September 10, 2014


Abstract:     
We study capacity management in a service system in which workers determine their own schedules. Our study is motivated by recent innovations in service delivery such as work-from-home call centers and ride-sharing services. Providers in these settings promise their customers a given level of service but do not directly assign agents to time intervals. Agents choose when to work based on the compensation offered and their individual availability thresholds in the relevant time interval. A provider must recruit enough agents and set the period-by-period compensation so as to generate enough participation to meet the desired service level.

We examine how a service provider should manage self-scheduling agents in two settings. The first is inspired by work-from-home call centers and assumes a service firm must staff to achieve contracted service level targets. The second is a newsvendor setting in which the service level is endogenous. In both settings, the firm prefers having a large pool of agents. However, this creates a tension between the firm's profit and agents' earnings. If the firm must guarantee agents a minimal level of compensation, the firm recruits a smaller pool of agents and limits the number of agents that can work in some time periods.

Finally, we show that allowing self scheduling leads to non-conventional cost structures and can be costly. Specifically, the average cost to serve a customer may increase with the volume of transactions. In other words, the service system does not exhibit the economies of scale one would typically expect. Further, we show that when the service level is endogenous, self scheduling leads to less staffing and hence worse service than a conventional benchmark.

Number of Pages in PDF File: 32

Keywords: strategic servers, independent capacity, distributed systems, service operations

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Date posted: October 6, 2013 ; Last revised: September 11, 2014

Suggested Citation

Gurvich, Itay and Lariviere, Martin and Moreno, Antonio, Staffing Service Systems When Capacity Has a Mind of Its Own (September 10, 2014). Available at SSRN: http://ssrn.com/abstract=2336514 or http://dx.doi.org/10.2139/ssrn.2336514

Contact Information

Itay Gurvich
Northwestern University ( email )
2001 Sheridan Road
Evanston, IL 60208
United States
Martin Lariviere
Northwestern University - Kellogg School of Management ( email )
2001 Sheridan Road
Evanston, IL 60208
United States
HOME PAGE: http://operationsroom.wordpress.com/
Antonio Moreno (Contact Author)
Northwestern University - Department of Managerial Economics and Decision Sciences (MEDS) ( email )
2001 Sheridan Road
Evanston, IL 60208
United States
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