Choice-Based Demand Management and Vehicle Routing in E-Fulfillment

Attended home delivery services face the challenge of providing narrow delivery time slots to ensure customer satisfaction, while keeping the significant delivery costs under control. To that end, a firm can try to influence customers when they are booking their delivery time slot so as to steer them toward choosing slots that are expected to result in cost-effective schedules. We estimate a multinomial logit customer choice model from historic booking data and demonstrate that this can be calibrated well on a genuine e-grocer data set. We propose dynamic pricing policies based on this choice model to determine which and how much incentive (discount or charge) to offer for each time slot at the time a customer intends to make a booking. A crucial role in these dynamic pricing problems is played by the delivery cost, which is also estimated dynamically. We show in a simulation study based on real data that anticipating the likely future delivery cost of an additional order in a given location can lead to significantly increased profit as compared with current industry practice

Semi-Markov Graph Dynamics

In this paper, we outline a model of graph (or network) dynamics based on two ingredients. The first ingredient is a Markov chain on the space of possible graphs. The second ingredient is a semi-Markov counting process of renewal type. The model consists in subordinating the Markov chain to the semi-Markov counting process. In simple words, this means that the chain transitions occur at random time instants called epochs. The model is quite rich and its possible connections with algebraic geometry are briefly discussed. Moreover, for the sake of simplicity, we focus on the space of undirected graphs with a fixed number of nodes. However, in an example, we present an interbank market model where it is meaningful to use directed graphs or even weighted graphs.Comment: 25 pages, 4 figures, submitted to PLoS-ON

Solvable non-Markovian dynamic network

Non-Markovian processes are widespread in natural and human-made systems, yet explicit modeling and analysis of such systems is underdeveloped. We consider a non-Markovian dynamic network with random link activation and deletion (RLAD) and heavy-tailed Mittag-Leffler distribution for the interevent times. We derive an analytically and computationally tractable system of Kolmogorov-like forward equations utilizing the Caputo derivative for the probability of having a given number of active links in the network and solve them. Simulations for the RLAD are also studied for power-law interevent times and we show excellent agreement with the Mittag-Leffler model. This agreement holds even when the RLAD network dynamics is coupled with the susceptible-infected-susceptible spreading dynamics. Thus, the analytically solvable Mittag-Leffler model provides an excellent approximation to the case when the network dynamics is characterized by power-law-distributed interevent times. We further discuss possible generalizations of our result

Invariant, super and quasi-martingale functions of a Markov process

We identify the linear space spanned by the real-valued excessive functions of a Markov process with the set of those functions which are quasimartingales when we compose them with the process. Applications to semi-Dirichlet forms are given. We provide a unifying result which clarifies the relations between harmonic, co-harmonic, invariant, co-invariant, martingale and co-martingale functions, showing that in the conservative case they are all the same. Finally, using the co-excessive functions, we present a two-step approach to the existence of invariant probability measures

Linear independence of root equations for M/G /1 type Markov chains

There is a classical technique for determining the equilibrium probabilities of M/G/1 type Markov chains. After transforming the equilibrium balance equations of the chain, one obtains an equivalent system of equations in analytic functions to be solved. This method requires finding all singularities of a given matrix function in the unit disk and then using them to obtain a set of linear equations in the finite number of unknown boundary probabilities. The remaining probabilities and other measures of interest are then computed from the boundary probabilities. Under certain technical assumptions, the linear independence of the resulting equations is established by a direct argument involving only elementary results from matrix theory and complex analysis. Simple conditions for the ergodicity and nonergodicity of the chain are also given.Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/47619/1/11134_2005_Article_BF01245323.pd

Analysis of finite-buffer state-dependent bulk queues

<p>In this paper, we consider a general state-dependent finite-buffer bulk queue in which the rates and batch sizes of arrivals and services are allowed to depend on the number of customers in queue and service batch sizes. Such queueing systems have rich applications in manufacturing, service operations, computer and telecommunication systems. Interesting examples include batch oven processes in the aircraft and semiconductor industry; serving of passengers by elevators, shuttle buses, and ferries; and congestion control mechanisms to regulate transmission rates in packet-switched communication networks. We develop a unifying method to study the performance of this general class of finite-buffer state-dependent bulk queueing systems. For this purpose, we use semi-regenerative analysis to develop a numerically stable method for calculating the limiting probability distribution of the queue length process. Based on the limiting probabilities, we present various performance measures for evaluating admission control and batch service policies, such as the loss probability for an arriving group of customers and for individual customers within a group. We demonstrate our method by means of numerical examples.</p>

Solving the chemical master equation using sliding windows

<p>Abstract</p> <p>Background</p> <p>The chemical master equation (CME) is a system of ordinary differential equations that describes the evolution of a network of chemical reactions as a stochastic process. Its solution yields the probability density vector of the system at each point in time. Solving the CME numerically is in many cases computationally expensive or even infeasible as the number of reachable states can be very large or infinite. We introduce the sliding window method, which computes an approximate solution of the CME by performing a sequence of local analysis steps. In each step, only a manageable subset of states is considered, representing a "window" into the state space. In subsequent steps, the window follows the direction in which the probability mass moves, until the time period of interest has elapsed. We construct the window based on a deterministic approximation of the future behavior of the system by estimating upper and lower bounds on the populations of the chemical species.</p> <p>Results</p> <p>In order to show the effectiveness of our approach, we apply it to several examples previously described in the literature. The experimental results show that the proposed method speeds up the analysis considerably, compared to a global analysis, while still providing high accuracy.</p> <p>Conclusions</p> <p>The sliding window method is a novel approach to address the performance problems of numerical algorithms for the solution of the chemical master equation. The method efficiently approximates the probability distributions at the time points of interest for a variety of chemically reacting systems, including systems for which no upper bound on the population sizes of the chemical species is known a priori.</p