The influence of transportation service level on a municipal service center’s costs: A numerical study based on supply chain management models

Abstract

This paper deals with scheduling of appointments between providers and customers (with reservations or walk-in ones) in municipal service centers. In order to improve the service level and reduce the uncertainty of the number of customers’ demand, a free transportation service from the customers’ locations to the service center and back is operated. An optimal transportation service level (TSL) is set in order to minimize the provider’s total idle time and overtime on the one hand, and the transportation service’s operation cost on the other hand. We show how the optimal number of customers to book in advance depends, analogically to inventory management models, on the ratio between the provider’s idle time (“surplus”) and overtime (“shortage”) unit costs. The lower impact of the TSL on the demand, the lower optimal TSL and expected cost, especially if the surplus cost is higher than the shortage cost. Furthermore, we add a safety constraint, according to which, the TSL level must be high enough such that the probability for nonarrival of at-risk customers is small. We numerically find that high percentage of at-risk customers in the population, may significantly increase the TSL, and consequently, lead to meaningful jump of the expected cost (up to 26%).