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Joint demand and capacity management in a restaurant system

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  • Hwang, Johye
  • Gao, Long
  • Jang, Wooseung

Abstract

This paper studies the demand and capacity management problem in a restaurant system. A queueing-based optimization model with underlying quasi birth-and-death process and state-dependent functions is developed to address the dynamic and nonlinearity difficulties. In particular, our model explicitly captures the demand changes with respect to the system congestion state on a near real-time dynamic basis. With this framework, we empirically examine the relative performance of commonly used strategies for the case of a local restaurant. The study shows that a strategy that balances service quality and cost yields maximum profit. The result indicates that the traditional view of the conflict between service quality and cost can be overcome by using an interdisciplinary perspective of marketing and operations. Both perspectives should be embraced in academic research and industrial practice in capacity planning decisions for services.

Suggested Citation

  • Hwang, Johye & Gao, Long & Jang, Wooseung, 2010. "Joint demand and capacity management in a restaurant system," European Journal of Operational Research, Elsevier, vol. 207(1), pages 465-472, November.
  • Handle: RePEc:eee:ejores:v:207:y:2010:i:1:p:465-472
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    References listed on IDEAS

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    Cited by:

    1. Hanukov, Gabi & Avinadav, Tal & Chernonog, Tatyana & Yechiali, Uri, 2019. "Performance improvement of a service system via stocking perishable preliminary services," European Journal of Operational Research, Elsevier, vol. 274(3), pages 1000-1011.
    2. Long Gao & Jim (Junmin) Shi & Michael F. Gorman & Ting Luo, 2020. "Business Analytics for Intermodal Capacity Management," Manufacturing & Service Operations Management, INFORMS, vol. 22(2), pages 310-329, March.
    3. Wei Zhang & Long Gao & Mohammad Zolghadr & Dawei Jian & Mohsen ElHafsi, 2023. "Dynamic incentives for sustainable contract farming," Production and Operations Management, Production and Operations Management Society, vol. 32(7), pages 2049-2067, July.
    4. Kaan Kuzu & Long Gao & Susan H. Xu, 2019. "To Wait or Not to Wait: The Theory and Practice of Ticket Queues," Manufacturing & Service Operations Management, INFORMS, vol. 21(4), pages 853-874, October.
    5. C. D’Apice & A. N. Dudin & O. S. Dudina & R. Manzo, 2024. "Analysis of Queueing System with Dynamic Rating-Dependent Arrival Process and Price of Service," Mathematics, MDPI, vol. 12(7), pages 1-20, April.
    6. He, Zhou & Han, Guanghua & Cheng, T.C.E. & Fan, Bo & Dong, Jichang, 2019. "Evolutionary food quality and location strategies for restaurants in competitive online-to-offline food ordering and delivery markets: An agent-based approach," International Journal of Production Economics, Elsevier, vol. 215(C), pages 61-72.

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