Dynamic product planning for online service platform coordinating with service agents and operations resource providers: a three-level optimization approach

Product planning or product line design is critical for online service platform operations nowadays. There are limited studies on systematic optimization of service product planning (SPP) in light of emerging trend of online service platform that leverages upon multiple service agents and numerous service operations resource providers through outsourcing. This may be partially due to difficulties in quantitative optimization of service operations and complexity of service product fulfillment that are very different from those physical products in the manufacturing sector. The fulfillment of service products involves a complicated planning process that entails a dynamic interactive optimization problem involving multiple decision-makers at multiple levels of abstraction. This paper proposes a quantitative decision-making method with three-level leader-follower structure to deal with the dynamic SPP problem for online service platform to coordinate with service agents and their resource providers. The proposed solution framework includes designing a reasonable optimization structure, defining decision variables of three-level decision-makers, and establishing a 0–1 mixed three-level optimization (TLO) model for coordinated optimization of three decision-makers. A case study of applying the dynamic SPP method to the tourism industry is reported to illustrate the feasibility and potential.