153 / 2024-04-22 10:52:53

Should a local service provider adopt online sales channel？

local service,online sales channel,resource allocation,queuing theory

The development of electronic commerce brings opportunities to the traditional local service providers such as restaurants, hair salons, and car washes, etc. Many local service providers consider adopting online sales channel on the electronic commerce platform. In this situation, they serve two types of customers: online customers and offline customers. In order to increase profits, local service providers should adopt appropriate queuing discipline and service resource allocation plan to serve the two types of customers. This research first studies the service resource allocation for a local service provider who adopts online sales channel and use separate queuing discipline to serve two types of customers. The optimal service resource allocation plan and maximum profit are derived. Then the profits under mixed queuing discipline and separate queuing discipline are compared. At last, conditions under which adopting online sales channel is profitable are discussed. The impacts of parameters, such as customer arrival rate and service revenue of different customers, on optimal allocation plan, profit and the comparison result are discussed. We find that two kinds of queuing discipline are suit for different situations. Adopting online sales channel can bring more profit to a service provider when the arrival rate of offline customers is small or offline customers are impatient, and is harmful to a service provider if offline customers are very patient and the arrival rate is large.