Online Resource Allocation with Limited Flexibility

42 Pages Posted: 15 Jun 2016 Last revised: 31 Aug 2017

Arash Asadpour

New York University (NYU) - Department of Information, Operations, and Management Sciences

Xuan Wang

Hong Kong University of Science and Technology, ISOM Department

Jiawei Zhang

New York University (NYU) - Department of Information, Operations, and Management Sciences

Date Written: June 12, 2016

Abstract

We consider a class of online resource allocation problems in which there are n types of resources with limited initial inventory and n demand classes. The resources are flexible in that each type of resources can serve more than one demand class. In this paper, we focus on a special class of structures with limited flexibility, the long chain design, which was proposed by Jordan and Graves (1995) and has been an important concept in the design of sparse flexible processes. We study the long chain design in an online stochastic environment where the requests are drawn repeatedly and independently from a non-stationary probability distribution over the different demand classes. Also, the decision on how to address each request must be made immediately upon its arrival. We show the effectiveness of the long chain design in mitigating supply-demand mismatch under a simple myopic online allocation policy. In particular, we provide an upper bound on the expected total number of lost sales that is irrespective of how large the market size is.

Suggested Citation

Asadpour, Arash and Wang, Xuan and Zhang, Jiawei, Online Resource Allocation with Limited Flexibility (June 12, 2016). Available at SSRN: https://ssrn.com/abstract=2794679 or http://dx.doi.org/10.2139/ssrn.2794679

Arash Asadpour

New York University (NYU) - Department of Information, Operations, and Management Sciences ( email )

44 West Fourth Street
New York, NY 10012
United States

Xuan Wang (Contact Author)

Hong Kong University of Science and Technology, ISOM Department ( email )

Clear Water Bay
Kowloon
Hong Kong, Not Applicable
Hong Kong
852-23585854 (Phone)

Jiawei Zhang

New York University (NYU) - Department of Information, Operations, and Management Sciences ( email )

44 West Fourth Street
New York, NY 10012
United States

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