Logo Logo

The Value of Dynamic Resource Pooling: Should a service network be integrated or Product-focused?, Management Science

Abstract

We investigate how network design impacts capacity requirements and responsiveness, which is a natural performance indicator of quality of service. Inspired by the contrasting network design approaches of FedEx and UPS, we study when two service classes (e.g., express or regular) should be served by dedicated resources (e.g., air or ground) or by an integrated network. We present analytic expressions for the delay distributions and the network integration value, which show how the value of network integration depends on the quality of service guarantees (speed and reliability of service) and the demand characteristics (averages volume and variance of each service class and their correlation). Our results suggests that operating dedicated networks is a fine strategy (meaning that network integration is of little value) if the firm primarily serves express requests with high reliability and if the correlation with regular requests is not strongly negative.

Type

Article

Author(s)

Baris Ata, Jan A. Van Mieghem

Date Published

2009

Citations

Ata, Baris, and Jan A. Van Mieghem. 2009. The Value of Dynamic Resource Pooling: Should a service network be integrated or Product-focused?. Management Science. 55(1): 115-131.

KELLOGG INSIGHT

Explore leading research and ideas

Find articles, podcast episodes, and videos that spark ideas in lifelong learners, and inspire those looking to advance in their careers.
learn more

COURSE CATALOG

Review Courses & Schedules

Access information about specific courses and their schedules by viewing the interactive course scheduler tool.
LEARN MORE

DEGREE PROGRAMS

Discover the path to your goals

Whether you choose our Full-Time, Part-Time or Executive MBA program, you’ll enjoy the same unparalleled education, exceptional faculty and distinctive culture.
learn more