Customer Balking Research Articles

Customer balking behavior in the newsvendor model: Its impact on performance measures and decision under uncertain balking parameters

In this paper, we investigate the performance measures of newsvendor model in an environment of customer balking, which occurs when customers are reluctant to buy a product if its available inventory falls below a threshold level. We derive the explicit expression of several performance measures in the newsvendor model with customer balking and also provide those upper or lower bound in the worst demand distribution. In addition, based on some properties associated with customer balking parameters, we suggest a constrained optimization problem to decide order quantity under the circumstance with uncertain balking parameters given as a form of range. We illustrate the concepts developed here through simple numerical examples and conclude with future research topics under the balking situation.

A distribution-free newsvendor problem with nonlinear holding cost

In this paper, we analyse a single-period newsvendor model to determine the optimal order quantity where the customers’ balking occurs.This scenario occurs when the customers are opposed to buy a product for various reasons, such as decreasing quality of product, product is not as good as fresh when it reaches under a threshold level, etc. The model is investigated by assuming that the holding cost function depends on order quantity and the inventory level at which customer balking occurs depends on holding cost. The model allows partial backlogging and permits part of the backlogged shortages to turn into lost sales. We develop the model without taking any specific distributional form of demand, only assuming the mean and the variance of the distribution of demand. Finally, we illustrate the model by numerical examples and compare our distribution-free model with the specific distributional form of demand.

Robust Newsvendor Model with Customer Balking by the Bi-levels of Inventory Threshold

Robust Newsvendor Model with Customer Balking by the Bi-levels of Inventory Threshold

불확실한 수율과 고객이탈행위를 고려한 강건한 뉴스벤더 모델

Purpose: In this paper, we have considered a problem of newsvendor model in an environment of random yields in quality and customer balking behavior, in which only the mean and the variance of the demand are known. In practice, the distributional information of the demand is very limited and only the mean and variance are guessed by experience. In addition, due to the customers balking behavior occurring when the available inventory level decreases, the product's demand becomes a function of inventory level so that the classical newsvendor's optimal order quantity is no longer optimal. Methods: We have developed an optimal order quantity model that enables us to incorporate the random yield of a product and the customer balking information such as a threshold inventory level of balking and the corresponding probability of a sale during the balking. Results: We illustrated the concepts developed here through simple numerical examples and showed the robustness of our model in a various setting of parameters. Conclusion: This paper provides a useful analysis showing that our distribution-specific and distribution-free approach to the optimal order quantity in the newsboy model can act as an effective tools to match supply with demand for these product lines.

Optimal production control of a service-oriented manufacturing system with customer balking behavior

The great challenge for service-oriented manufacturing (SOM) is how to cope with customer behavior while making decision on production planning and scheduling. In this paper, we consider a single-stage manufacturing system for SOM with impatient customers. In order to represent customer balking behavior caused by backlog, we employ a balking function, which is an arbitrary non-decreasing function of the backlog for characterizing the customer’s response to the backlog. The objective is to find the optimal production policy that minimizes the system cost. The problem is formulated as a Markov decision process. The optimal production policy is proved to be a base-stock policy. The effects of system parameters on the optimal base-stock level are analytically investigated, and the impact of customer balking behavior on the system is illustrated by numerical example in which linear balking function is employed. Numerical example shows that customer balking has a significant impact on the optimal control and the performance measures of the system under the optimal policy.

A distribution-free newsvendor model with balking and lost sales penalty

In this paper, we extend the classical single period newsvendor model in an environment of customer balking, which occurs when customers are reluctant to buy a product if its available inventory falls below a threshold level. Since failure to make a sale usually results in a cost penalty, in addition to the opportunity cost of lost sales, we incorporate such costs in our model. Furthermore, we extend our model to include fixed ordering costs. Our analysis is based on the assumption that only the mean and the variance of the distribution of demand are known, without assuming any specific distributional form. We illustrate the concepts developed here through simple numerical examples and demonstrate the effectiveness of our approach by solving a set of 1000 randomly generated test problems.

On the impact of customer balking, impatience and retrials in telecommunication systems

This paper deals with a Markovian multiserver model, where the simultaneous effect of customer balking, impatience and retrials is evaluated. The study of systems incorporating these features is motivated by the observation of real service systems where these queueing phenomena interact. Simple approximations based on truncation and generalized truncation are provided. These approximations are compared according to different criteria for several selected scenarios. Finally, our results are used to evaluate the optimal ratio between the number of available channels and the number of waiting positions in an application to call center management.

Comparison of customer balking and reneging behavior to queueing theory predictions

In this paper, we study customer decision-making while in a queuing situation. Customers can either join a queue or balk and return at a later time. Customers who join can renege and also return la...

Comparison of customer balking and reneging behavior to queueing theory predictions: An experimental study

In this paper, we study customer decision-making while in a queuing situation. Customers can either join a queue or balk and return at a later time. Customers who join can renege and also return later. Our objective is to determine whether people seem to follow the benchmarks provided by queuing theory or whether psychological costs and perceptions of time invalidate these benchmarks. We use a computerized experiment where participants face explicit financial rewards and penalties for their decisions in a between subjects, fully crossed design with two experimental factors— clock data, and information about expected waiting time, each at two levels, presence and absence. Evaluated against the queuing theory benchmark, decision-making is quite good. Reneging is very rare, as queuing theory requires. Most participants follow a consistent rule for balking. They balk at every line longer than some critical value, as prescribed by queueing theory. But, even when corrected for heterogeneity in time perception, this critical value is greater than the one that minimizes expected waiting time. The large critical value may be due to risk-aversion or participants overestimating the switching cost. The results are supported by a second experiment using different parameters. Information improved decisions for most participants by increasing the precision of waiting time estimates. In addition, information helps participants who underestimate waiting time to correctly leave the line and those who over-estimate to stay. Providing clock time had almost no impact on decision-making.

The impact of retrials on call center performance

This paper models a call center as a Markovian queue with multiple servers, where customer balking, impatience, and retrials are modeled explicitly. The resulting queue is analyzed both in a stationary and non-stationary setting. For the stationary setting a fluid approximation is proposed, which overcomes the computational burden of the continuous time markov chain analysis, and which is shown to provide an accurate representation of the system for large call centers with high system load. An insensitivity property of the retrial rate to key system parameters is established. The fluid approximation is shown to work equally well for the non-stationary setting with time varying arrival rates. Using the fluid approximation, the paper explores the retrial phenomenon for a real call center. The model is used to estimate the real arrival rates based on demand data where retrials cannot be distinguished from first time calls. This is a common problem encountered in call centers. Through numerical examples, it is shown that disregarding the retrial phenomenon in call centers can lead to huge distortions in subsequent forecasting and staffing analysis.

Letter to the Editor—Comments on a Paper by A. Novaes and E. Frankel, “A Queuing Model for Unitized Cargo Generation”

Some discrepancies in an earlier paper describing a bulk service queuing situation with customer balking or reneging are pointed out. Necessary modifications to make the model more valid are incorporated in a reformulation and an approach for developing the state-time probabilities of the system is suggested.