Managing Service Systems via Disguised Queues: The Role of Retaliating Customers*

Abstract

ABSTRACTTourist attractions, such as observatory decks, boat tours, and museums, have recently started to manage their operations via hiding some parts of their waiting lines, which we will refer to as queue disguising behavior. If customers are not aware of these disguised parts of the queues, firms can potentially boost their revenues by using queue disguising strategy. However, it is not obvious that firms benefit from disguised queues when customers retaliate after experiencing that the queue management tactics led them to make erroneous decisions. Our goal in this article is to investigate the impacts of the retaliatory customer behavior on firms' queue disguising decisions and profits. In the absence of retaliating customers, we find that the optimal queue disguising strategy yields only negligible profit improvements, relative to letting customers observe the entire waiting line. One, then, may expect that the queue disguising should not be a profitable strategy in a system with retaliating customers. We establish that this intuition is only true for firms incurring negligible holding costs. If keeping customers in the queue is sufficiently high for a firm, we, surprisingly, find that the firm achieves sizable profit improvements via queue disguising in the presence of the retaliatory behavior. More interestingly, we show that these benefits become more pronounced as the holding cost increases, in contrast to the case without retaliating customers. Our results, then, suggest that firms that are subjected to nonnegligible holding costs should employ the queue disguising strategy only while facing retaliating customers.