Can Time Buffers Lead to Delays? The Role of Operational Flexibility

Abstract

In operating systems where the feasible start time of activities is uncertain, the available (actual) time buffers for conducting the activities are distinct from planned (scheduled) time buffers. We study how, and why, do these two buffers (scheduled and actual) affect operating performance? We propose a stylized model that explicitly accounts for operational flexibility to examine these questions. Additionally, we evaluate the empirical content of our model by taking its predictions to real-world data from the airline industry. Our theoretical results show, and empirical results confirm, that both scheduled and actual time buffers impact operating performance. Specifically, smaller actual time buffers and larger scheduled time buffers are associated with poorer operating performance. Moreover, both these effects are moderated by operational flexibility, i.e., the negative impact of these buffers are stronger with lower flexibility. Our empirical results also serve to illustrate that these two operational variables are not just statistically significant, but, from a practical perspective for the airline industry, explain a substantial part of delays compared to the variables identified in past literature. Overall, we highlight the importance of understanding both the direct effect of time buffers and the role of resource flexibility in managing operational performance.