Optimal Pricing Strategy for Queuing Systems with Capacity Constraint Problem

Although the lost profit from lost business is quite difficult to estimate for the queuing systems with cyclic demands, my previous work presents a creative and effective approach to formulate waiting cost as balking loss. Using the estimation of waiting cost allows decision maker to have the capability of determining the optimal number of servers for each planning period by minimizing total cost including service cost and waiting cost. However, some queuing systems may not be able to increase the number of servers. When facing this capacity constraint problem, this paper presents an approach to formulate the balking index as pi times thetas , where pi is the discount rate and thetas is the balking index of the restaurant before using discount strategy. With this formulation, managers have the capability of determining the optimal pricing strategy by maximizing the total profit.