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Advances in Operations Research
Volume 2015, Article ID 587103, 9 pages
http://dx.doi.org/10.1155/2015/587103
Research Article

Optimal Switching Strategy between Admission Control and Pricing Control Policies with Two Types of Customers and Search Costs

Department of Industrial and Information Systems Engineering, Soongsil University, 511 Sangdo-dong, Dongjak-ku, Seoul 156-743, Republic of Korea

Received 19 September 2014; Accepted 9 March 2015

Academic Editor: Viliam Makis

Copyright © 2015 Jae-Dong Son. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

This paper presents a switching strategy between the admission control and the pricing control policies in a queueing system with two types of customers. For an arriving first-type customer, the decision maker has an option on which policy to choose between the two control policies; that is, one determines whether or not to admit the customer’s request for the service (admission control) or decides a price of the customer’s request and offers it to the customer (pricing control). The second-type customers are only served when no first-type customers are present in the system in order to prevent the system from being idle. This would yield an extra income, which we refer to as the sideline profit. The so-called search cost, which is a cost paid to search for customers, creates the search option on whether to continue the search or not. We clarify the properties of the optimal switching strategy as well as the optimal search policy in relation to the sideline profit in order to maximize the total expected net profit. In particular, we show that when the sideline profit is sufficiently large, the two optimal switching thresholds exist with respect to the number of first-type customers in the system.