Service Systems with On-Demand and Reserved Servers
Prof. FENG, Zhi-chao
Assistant Professor – Presidential Young Scholar,
Department of Logistics and Maritime Studies, Faculty of Business,
The Hong Kong Polytechnic University
Date: 22 April 2025 (Tuesday)
Time: 14:30 – 16:00
Venue: E22 – G008
Host: Prof. Li XIAO, Associate Professor in Business Intelligence and Analytics
Abstract
Many modern queueing-based service systems have a choice of using either long-term reserved capacity or short-term on-demand capacity. We study a canonical M/M/s queueing system that employs both reserved and (relatively more expensive) on-demand servers – the number of reserved servers is decided at the beginning of the time horizon while the number of on-demand servers is decided dynamically as needed, in real time. We study the problem of minimizing the infinite-horizon discounted cost incurred in the hiring of servers and in the waiting of the jobs in the queue. For any given number of reserved servers, we show that the optimal on-demand capacity control is a threshold-based bang-bang policy: If the number of jobs in the system is below a threshold, then no on-demand servers are employed. Otherwise, the number of on-demand servers is chosen such that no jobs wait (i.e., the number of servers in use equals the number of jobs). Further, we provide an ε-optimal solution; that is, for any ε> 0, we prescribe a solution, comprised of a number of reserved servers and a bang-bang threshold, whose expected cost is at most ε above the optimal.
Speaker
Zhichao Feng is an assistant professor in the Department of Logistics and Maritime Studies at the Hong Kong Polytechnic University. He holds a PhD in Operations Management from the University of Texas at Dallas and a BS in Automation from Tsinghua University. His research interests include pricing and revenue management, queueing theory and its applications, and operations management in cloud computing. His work has been published in Management Science, Operations Research, and Production and Operations Management.
All are welcome!
