Minimizing Customer Waiting Costs for Rental Vehicle Providers using Threshold Reservation Policies
Abstract
Vehicle rental providers o er di erentiated services to reserve and walk-in customers. In
this research, we study one such service di erentiation strategy, a vehicle threshold policy, which is
to hold vehicles for reserve class customers in anticipation of their future arrivals. To consider the
impact that vehicle threshold policies have on reserve and walk-in customer waiting times, we model
a rental depot as a multi-class non-work-conserving semi-open queue with stochastic inputs. For
exponential and deterministic service time distributions, we identify the optimal threshold quantity
for stationary customer arrivals using closed-form expressions for the expected waiting times of both
customer classes. For non-stationary customer arrivals, we develop di erent threshold policies and
analyze their performance using a detailed simulation model. Through numerical testing, we provide
insights into recommended threshold policies that can be applied to improve the pro tability of a
rental provider.
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- Working Papers [2627]