Balancing Queueing Systems With Excess Demand

Abstract

In a rough economic environment and increased competition, one issue critical to many businesses is to achieve an optimum balance between supply and demand. Double-ended queuing structure, where demand and supply occur simultaneously, can be utilized to model various manufacturing and service activities. By associating costs per time unit due to a unit of excess of supply or demand, the total cost will include now costs due to imbalance of demand and supply. The authors examine the queuing behavior and how to minimize the above total cost by advanced planning aimed to hold imbalance costs at a minimum.

In this paper, the main focus will be on situations where a stochastic system has become unstable due to demand exceeding supply. To determine how sensitive optimal solutions are to changes in model parameters, for each policy, either decreasing demand or increasing supply, exact optimal solutions were found for a large number of scenarios and then used this scenarios database to fit the best possible regression model. The paper ends illustrating the use of the model to research funding where typically proposals compete for scarce funding resources.