Incentives for Shared Services: Multi-Server Queueing Systems with Priorities

Manufacturing & Service Operations Management, Forthcoming

31 Pages Posted: 16 Jul 2021 Last revised: 27 Jul 2021

See all articles by Hanlin Liu

Hanlin Liu

Southern University of Science and Technology

Yimin Yu

City University of Hong Kong - College of Business

Date Written: July 15, 2021

Abstract

Problem definition: We study shared service whereby multiple independent service providers collaborate by pooling their resources into a shared service center (SSC). The SSC deploys an optimal priority scheduling policy for their customers collectively by accounting for their individual waiting costs and service level requirements. We model the SSC as a multi-class M/M/c queueing system subject to service level constraints.

Academic/Practical relevance: Shared services are increasingly popular among firms for saving operational costs and improving service quality. One key issue in fostering collaboration is the allocation of costs among different firms.

Methodology: To incentivize collaboration, we investigate cost allocation rules for the SSC by applying concepts from cooperative game theory.

Results: To empower our analysis, we show that a cooperative game with polymatroid optimization can be analyzed via simple auxiliary games. By exploiting the polymatroidal structures of the multiclass queueing systems, we show when the games possess a core allocation. We explore the extent to which our results remain valid for some general cases.

Managerial implications: We provide operational insights and guidelines on how to allocate costs for SSC under the multi-server queueing context with priorities.

Keywords: resource pooling, shared service, multiclass queueing systems, priority rules, polymatroid, cooperative game theory

Suggested Citation

Liu, Hanlin and Yu, Yimin, Incentives for Shared Services: Multi-Server Queueing Systems with Priorities (July 15, 2021). Manufacturing & Service Operations Management, Forthcoming , Available at SSRN: https://ssrn.com/abstract=3887297 or http://dx.doi.org/10.2139/ssrn.3887297

Hanlin Liu (Contact Author)

Southern University of Science and Technology ( email )

1088 Xueyuan Avenue
Shenzhen, Guangdong 518055
China

Yimin Yu

City University of Hong Kong - College of Business ( email )

83 Tat Chee Avenue
Kowloon
Hong Kong

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