ISyE Graduate Seminar Series: Staffing and Pricing in Co-Sourced Call Centers
Please join us for our next seminar of fall semester. This research-based seminar will feature Professor Jeffrey P. Kharoufeh from Clemson University who will discuss staffing and pricing in co-sourced call centers.
3:15 p.m. - Refreshments
3:30 p.m. - Graduate Seminar
Professor Jeffrey P. Kharoufeh
Department of Industrial Engineering
Clemson University
About the seminar
Increasingly, service organizations are electing to co-source some of their customer support functions, especially those handled by call centers. That is, rather than servicing requests exclusively with in-house agents, a portion of service capacity can be delegated to an external service provider. Indeed, the business of co-sourcing customer service centers has rapidly grown into a multinational, multibillion dollar industry. However, organizations must weigh the benefits (economic or otherwise) of co-sourcing against the potential costs of surrendering control of their primary source of direct customer support.
In this talk, Kharoufeh presents a joint queueing and stochastic programming framework to help call center managers decide how much of their demand should be co-sourced, and how much should be serviced in-house when faced with uncertain and dynamic call arrival rates. Before the arrival rate is realized, the call center responds to the external service provider's prices by setting its in-house staffing levels and choosing the number of co-sourced agents to place on call in order to minimize its expected total staffing costs. Once the arrival rates are realized, the call center activates the on-call agents to ensure that quality-of-service (QoS) requirements are met.
For its part, the external provider seeks to maximize expected total revenues over a finite contract period by setting per-agent holding and activation prices. Kharoufeh's team models the interplay between the call center and external service provider as a leader-follower game (formulated as a bilevel program) in which the call center, acting as the follower, solves a two-stage stochastic integer program with recourse. They show that the bilevel program can be reformulated as a quadratically-constrained linear program to obtain the contractor's optimal per-agent holding and activation prices, and that the optimal staffing problem yields a highly-tractable, closed-form solution for a common set of QoS constraints. A numerical study demonstrates that cost reductions can be achieved over other common staffing rules in the presence of imperfect and asymmetric information.
About the speaker
Jeffrey P. Kharoufeh is Professor and Chair of the Department of Industrial Engineering at Clemson University. His methodological areas of expertise are applied probability and stochastic modeling with applications in energy systems, queueing, reliability, and maintenance optimization. His research has been funded by the National Science Foundation, the Air Force Office of Scientific Research, the National Reconnaissance Office, the Department of Veterans Affairs, and other federal agencies.
Kharoufeh earned a Ph.D. in Industrial Engineering and Operations Research from Pennsylvania State University, where he was an inaugural Weiss Graduate Fellow. He currently serves as an associate editor of Operations Research, area editor of Operations Research Letters and member of the editorial board of Probability in the Engineering and Informational Sciences. He is a Fellow of IISE and a professional member of INFORMS and the Applied Probability Society.