Optimal information disclosure in a production-inventory queueing system

Abstract

This study considers a production-inventory queueing system, where customers decide whether to wait for the item or leave without a purchase if a stockout occurs. The system manager determines the joint pricing and inventory control policy. In addition, the system manager can choose whether or not to provide information about the system state to arriving customers. Our strategic production-inventory queueing system includes the observable, unobservable, and almost unobservable systems, which are obtained by appropriately choosing the information disclosure policy by the system manager. In this study, we find the optimal information disclosure policy, as well as the optimal price and the optimal inventory control policy for the profit maximization and social welfare maximization. Under the optimal policy, the system manager should disclose the system state if and only if the queue length exceeds a certain threshold.