Managing scarcity through limits

In this research we contribute to the OR/OM literature by understanding limits as a mechanism to better match between supply and demand. Our overarching goal is to understand the implications of time and quantity limits on firms, consumers and social planners in both service and retail settings.

Service systems in which consumers choose how long to stay in service and value time in service are common in practice. Surprisingly, although they are abundant, the literature has not yet analyzed the behavior of consumers and service providers in these systems and their implications for revenue and welfare. This is the first research that uses queuing theory to lay the theoretical foundations for using time limits in such services. We have already established some theoretical results that speak to the optimality of time limits in these settings and plan to continue investigating the benefit/pitfalls of this mechanism both theoretically and empirically. The experiment we designed will complement the analytical findings by highlighting behavioral aspects of consumer decisions faced with time limitations. The model and experiments combined will contribute to the growing literature in behavioral service operations.

Retailers that face the risk of supply disruption often impose quantity restrictions that limit the number of units that customers can purchase. Intuitively, it is unclear whether and why such restrictions benefit a profit maximizing retailer. We would like to deepen our understanding of this mechanism and have already come up with a base model to analyze and initial results. The results will contribute for the literature and practice of managing operations and the response to supply disruptions—a growing concern in the face of the recent pandemic.