When to arrive at a queue with earliness, tardiness and waiting costs

TL;DR

This paper analyzes customer arrival strategies in a queue with earliness, tardiness, and waiting costs, deriving a Nash equilibrium and comparing it to the socially optimal solution.

Contribution

It introduces a model with linear earliness, tardiness, and waiting costs, deriving a continuous mixed Nash equilibrium strategy for customer arrivals.

Findings

Nash equilibrium is a continuous mixed strategy.

Equilibrium characterized by a set of equations.

Comparison shows differences between equilibrium and social optimum.

Abstract

We consider a queueing facility where customers decide when to arrive. All customers have the same desired arrival time (w.l.o.g.\ time zero). There is one server, and the service times are independent and exponentially distributed. The total number of customers that demand service is random, and follows the Poisson distribution. Each customer wishes to minimize the sum of three costs: earliness, tardiness and waiting. We assume that all three costs are linear with time and are defined as follows. Earliness is the time between arrival and time zero, if there is any. Tardiness is simply the time of entering service, if it is after time zero. Waiting time is the time from arrival until entering service. We focus on customers' rational behaviour, assuming that each customer wants to minimize his total cost, and in particular, we seek a symmetric Nash equilibrium strategy. We show that such a strategy is mixed, unless trivialities occur. We construct a set of equations that its solution provides the symmetric Nash equilibrium. The solution is a continuous distribution on the real line. We also compare the socially optimal solution (that is, the one that minimizes total cost across all customers) to the overall cost resulting from the Nash equilibrium.