A Little Flexibility is All You Need: On the Asymptotic Value of Flexible Capacity in Parallel Queuing Systems

Operations Research 2012 INFORMS, Vol. 60, No. 6, November–December 2012, pp. 1423–1435

13 Pages Posted: 8 Jun 2016

Date Written: July 2012

Abstract

We analytically study optimal capacity and flexible technology selection in parallel queuing systems. We consider N stochastic arrival streams that may wait in N queues before being processed by one of many resources (technologies) that differ in their flexibility. A resource’s ability to process k different arrival types or classes is referred to as level-k flexibility. We determine the capacity portfolio (consisting of all resources at all levels of flexibility) that minimizes linear capacity and linear holding costs in high-volume systems where the arrival rate ⅄ → ∞. We prove that “a little flexibility is all you need”: the optimal portfolio invests O(⅄) in specialized resources and only O(√⅄) in flexible resources and these optimal capacity choices bring the system into heavy traffic. Further, considering symmetric systems (with type-independent parameters), a novel “folding” methodology allows the specification of the asymptotic queue count process for any capacity portfolio under longest-queue scheduling in closed form that is amenable to optimization. This allows us to sharpen “a little flexibility is all you need”: the asymptotically optimal flexibility configuration for symmetric systems with mild economies of scope invests a lot in specialized resources but only a little in flexible resources and only in level-2 flexibility, but effectively nothing (o(√⅄)) in level-k > 2 flexibility. We characterize “tailored pairing” as the theoretical benchmark configuration that maximizes the value of flexibility when demand and service uncertainty are the main concerns.

Keywords: flexibility; capacity optimization; queueing network; diffusion approximation.

Suggested Citation

Bassamboo, Achal and Randhawa, Ramandeep S. and Van Mieghem, Jan Albert, A Little Flexibility is All You Need: On the Asymptotic Value of Flexible Capacity in Parallel Queuing Systems (July 2012). Operations Research 2012 INFORMS, Vol. 60, No. 6, November–December 2012, pp. 1423–1435. Available at SSRN: https://ssrn.com/abstract=2791020

Achal Bassamboo

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

2001 Sheridan Road
Evanston, IL 60208
United States

Ramandeep S. Randhawa

University of Southern California ( email )

Marshall School of Business
BRI 401, 3670 Trousdale Parkway
Los Angeles, CA 90089
United States

Jan Albert Van Mieghem (Contact Author)

Northwestern University - Kellogg School of Management ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

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