Strategic Open Routing in Service Networks

Management Science 65(2):735-750

52 Pages Posted: 11 Apr 2015 Last revised: 6 Dec 2021

See all articles by Alessandro Arlotto

Alessandro Arlotto

Duke University - Decision Sciences

Andrew Frazelle

University of Texas at Dallas - Naveen Jindal School of Management

Yehua Wei

Decision Sciences Area, Fuqua School of Business, Duke University

Date Written: September 12, 2017

Abstract

We study the behavior of strategic customers in an open-routing service network with multiple stations. When a customer enters the network, she is free to choose the sequence of stations that she visits, with the objective of minimizing her expected total system time. We propose a two-station game with all customers present at the start of service and deterministic service times, and we find that strategic customers "herd," i.e., in equilibrium all customers choose the same route. For unobservable systems, we prove that the game is supermodular, and we then identify a broad class of learning rules---which includes both fictitious play and Cournot best-response---that converges to herding in finite time. By combining different theoretical and numerical analyses, we find that the herding behavior is prevalent in many other congested open-routing service networks, including those with arrivals over time, those with stochastic service times, and those with more than two stations. We also find that the system under herding performs very close to the first-best outcome in terms of cumulative system time.

Keywords: service networks, herding, game theory, queueing

Suggested Citation

Arlotto, Alessandro and Frazelle, Andrew and Wei, Yehua, Strategic Open Routing in Service Networks (September 12, 2017). Management Science 65(2):735-750, Available at SSRN: https://ssrn.com/abstract=2589258 or http://dx.doi.org/10.2139/ssrn.2589258

Alessandro Arlotto

Duke University - Decision Sciences ( email )

Durham, NC 27708-0120
United States

HOME PAGE: http://people.duke.edu/~aa249/

Andrew Frazelle

University of Texas at Dallas - Naveen Jindal School of Management ( email )

P.O. Box 830688
Richardson, TX 75083-0688
United States

HOME PAGE: http://andrewfrazelle.com

Yehua Wei (Contact Author)

Decision Sciences Area, Fuqua School of Business, Duke University ( email )

100 Fuqua Drive
Durham, NC 27708-0204
United States

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