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Analysis of a two echelon Queueing-service system by considering Speed-Quality tradeoff in service  

1*Ata G.Zare, 2Alireza Haji, 3Farshid Jamali

1,2Industrial Engineering Department, Sharif University of Technology, Tehran, Iran

3Aerospace Engineering Department, Sharif University of Technology, Tehran, Iran


Abstract .In this paper we study a two-echelon system including a vendor and a service provider in customer-intensive services which introduced by Anand et al. (2011). Customers wish for high quality of service, which leads to longer service time for the service-provider. In the other hand, longer service times can cause to longer waiting time which is not desired for customers. So, tradeoff between service rate and quality of service/or product is critical. The market demand is according to Poisson process. The vendor will immediately send the order to the service-provider which works as a M/M/1 production system. The transportation time between the service-provider and vendor controlled by the service-provider, and is assumed to be deterministic and constant. Each customer has a different waiting cost per unit time and different expected value from a product or service; therefore, they decide whether to join the system or not based on the service value, price and expected waiting cost. We derive the speed quality equilibrium of the system as well as the optimal service rate and maximum demand attraction. Furthermore, we investigate the best policy of the system including optimal transportation time, price and service rate. We show that the optimal transportation time is independent from Degree of customer-intensity (α) of the service. Also, the equilibrium price will cause classifying the market, namely “market base” for small values of α, and “individual base” for high values of α. Unlike in the “market base”, losing the much market share is not undesirable in the “individual base”.
Keywords : speed-quality equilibrium, two-echelon system, service value, demands attraction

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