Dynamic Assignment of Flexible Service Resources

Management Science, Vol. 56, No. 8, pp. 1345-1361, 2010

26 Pages Posted: 21 Nov 2011

See all articles by Yalcin Akcay

Yalcin Akcay

Koc University

Anant Balakrishnan

McCombs School of Business, University of Texas at Austin

Susan H. Xu

Pennsylvania State University, University Park - Department of Supply Chain and Information Systems

Date Written: November, 20 2011

Abstract

Resource flexibility is an important tool for firms to better match capacity with demand so as to increase revenues and improve service levels. However, in service contexts that require dynamically deciding whether to accept incoming jobsand what resource to assign to each accepted job, harnessing the benefits of flexibility requires using effective methods for making these operational decisions. Motivated by the resource deployment decisions facing a professional service firm in the workplace training industry, we address the dynamic job acceptance and resource assignment problem for systems with general resource flexibility structure, i.e., with multiple resource types that can each perform different overlapping subsets of job types. We first show that, for systems containing specialized resources for individual job types and a versatile resource type that can perform all job types, the exact policy uses a threshold rule. With more general flexibility structures, since the associated stochastic dynamic program is intractable, we develop and test three optimization-based approximate policies. Our extensive computational tests show that one of the methods, which we call the Bottleneck Capacity Reservation policy, is remarkably effective in generating near-optimal solutions over a wide range of problem scenarios. We also consider a model variant that requires dynamic job acceptance decisions but permits deferring resource assignment decisions until the end of the horizon. For this model, we discuss an adaptation of our approximate policy, establish the effectiveness of this policy, and assess the value of postponing assignment decisions.

Suggested Citation

Akcay, Yalcin and Balakrishnan, Anantaram and Xu, Susan H., Dynamic Assignment of Flexible Service Resources (November, 20 2011). Management Science, Vol. 56, No. 8, pp. 1345-1361, 2010. Available at SSRN: https://ssrn.com/abstract=1962390

Yalcin Akcay

Koc University ( email )

Rumelifeneri Yolu
34450 Saryer
Istanbul, 34450
Turkey

Anantaram Balakrishnan

McCombs School of Business, University of Texas at Austin ( email )

Austin, TX 78712
United States

Susan H. Xu (Contact Author)

Pennsylvania State University, University Park - Department of Supply Chain and Information Systems ( email )

University Park
State College, PA 16802
United States

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