Optimal Routing Under Demand Surges: The Value of Future Arrival Rates

Abstract

When having access to demand forecasts, a crucial question is how to effectively use this information to make better resource allocation decisions, especially during demand surges like the COVID-19 pandemic. Despite the emergence of various advanced prediction models for hospital resources, there has been a lack of prescriptive solutions for hospital managers seeking concrete decision support, for example, guidance on whether to allocate beds from other specialties to meet the surge demand from COVID-19 patients by postponing elective surgeries. In their paper “Optimal Routing under Demand Surge: the Value of Future Arrival Rate,” the authors present a systematic framework to incorporate future demand into routing decisions in parallel server systems with partial flexibility and quantify the benefits of doing so. They propose a simple and interpretable two-stage index-based policy that explicitly incorporates demand forecasts into real-time routing decisions. Their analytical and numerical results demonstrate the policy’s effectiveness, even in the presence of large prediction errors.