Synchronizing Travelling and Waiting Processes: Customer Strategy with an Online Reservation System

26 Pages Posted: 8 Mar 2020

See all articles by Opher Baron

Opher Baron

University of Toronto - Rotman School of Management

O. Berman

University of Toronto - Rotman School of Management

Lu Wang

Shanghai University of Finance and Economics - College of Business

Date Written: February 11, 2020

Abstract

Online reservation system allows customers to join a queue and virtually wait for service before arriving on site. For example, some platforms have been designed to collect the information of restaurants and show the real-time congestion levels (e.g., Nowait). We consider a model in which customers must travel from their location to the service site incurring a travelling cost. Upon arrival to the service site the customer may have to wait until the customers ahead finish their service. When customers intend to book service online, they are informed about their positions in the queue at the time of booking, so that they make their decision whether or not to join the queue taking into account both their travelling time and expected waiting time. Intuitively, the more time customers spend on travelling to the site, the less time they have to wait in line. Therefore, there exists a tradeoff between the travelling and waiting cost. We show that if the travelling cost is sufficiently high, the attraction of the service is decreasing in the distance between the customer and service location; and if the travelling cost is negligible, the attraction of the service is increasing in the distance. With such customers behavior, the optimal location strategy of a service site heavily relies on the conditions of the travelling and benefit of the service.

Keywords: Queueing theory, customer behavior, online reservation

Suggested Citation

Baron, Opher and Berman, O. and Wang, Lu, Synchronizing Travelling and Waiting Processes: Customer Strategy with an Online Reservation System (February 11, 2020). Available at SSRN: https://ssrn.com/abstract=3536517 or http://dx.doi.org/10.2139/ssrn.3536517

Opher Baron

University of Toronto - Rotman School of Management ( email )

O. Berman

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

Lu Wang (Contact Author)

Shanghai University of Finance and Economics - College of Business ( email )

777 Guoding Road
Shanghai, 200433
China

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