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Stochastic Knapsack Revisited: The Service Level Perspective, Guodong Lyu, Mabel C. Chou, Chung-Piaw Teo, Zhichao Zheng, Yuanguang Zhong

Research Collection Lee Kong Chian School Of Business

A key challenge in the resource allocation problem is to find near-optimal policies to serve different customers with random demands/revenues, using a fixed pool of capacity (properly configured). In this paper, we study the properties of three classes of allocation policies-responsive (with perfect hindsight), adaptive (with information updates), and anticipative (with forecast information) policies. These policies differ in how the information on actual demand and revenue of each customer is being revealed and integrated into the allocation decisions. We show that the analysis of these policies can be unified through the notion of "persistency" (or service level) values-the probability that …