A DISCRETE-TIME STOCHASTIC MODEL OF SEARCHING AND SWITCHING STRATEGY IN A CUSTOMIZED SERVICE PROVIDING COMPANY

초록

This paper introduces switching strategy between admission control and pricing control policies as well as searching strategy in a customized service providing company. The company should spend the so-called search cost to find customers, which creates the search option on whether to continue the search or not. For an appearing customer by paying the search cost, the company has an option on which policy to choose between the two control policies, that is, it determines whether or not to admit the customer's request for the service (admission control) or decides a price of the customer's request and offers it to the customer (pricing control). We clarify the properties of the optimal switching strategy as well as the optimal search strategy in order to maximize the total expected net profit. In addition, in order to validate the economic effects of our switching strategy we implement numerical study examining the relative difference of the maximum expected profits between our switching model and the model without switching strategy. According to our results, employing the switching strategy can significantly improve the maximum expected profit as high as 13 percent.

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