LAUSR

We study a controllable two-station tandem queueing system, where customers (jobs) must first be processed at upstream station and then the downstream station. A manager dynamically allocates the service resource to each station to adjust the service rate, leading to a tradeoff between the holding cost and resource cost. The goal of the manager is to find the optimal policy to minimize the long-run average costs. The problem is constructed as a Markov decision process (MDP). In this paper, we consider the model in which the resource cost and service rate functions are more general than linear. We derive the monotonicity of the optimal allocation policy by the quasiconvexity properties of the value function. Furthermore, we obtain the relationship between the two stations’ optimal policy and conditions under which the optimal policy is unique and has the bang-bang control property. Finally, we provide some numerical experiments to illustrate these results.