Talk Title

Optimal Rationing of Pooled Resources with Individual Service-Level Constraints

Abstract

Resource pooling is a fundamental concept in supply chain management for reducing and hedging uncertainty. An important problem in resource pooling is to decide (1) the capacity level of pooled resources in anticipation of random demand of multiple customers and (2) how the capacity should be allocated to fulfill customer demands after demand realization. In this talk, I present a general framework to study this two-stage problem when customers require individual and possibly different service levels. The optimal rationing policy for any fixed feasible capacity level is developed via tools from online optimization. The optimality follows from a semi-infinite linear programming formulation of the problem and a strong duality with its dual problem, which also enables us to compute the optimal capacity levels. I discuss extensions of our approaches to more complex environments in supply chain management.

Location:

Evans Hall, Room 55 or Join via Zoom