Free-float bike-sharing (FFBS) systems have increased in popularity as a sustainable travel mode in recent years, especially in the urban areas of China. Despite the convenience such systems offer to customers, it is not easy to maintain an effective balance in the distribution of bikes. This study considers the dynamic rebalancing problem for FFBS systems, whereby user-based tactics are employed by incentivizing users to perform repositioning activities. Motivated by the fact that the problem is frequently faced by FFBS system operators entering a new market with limited information on travel demand, we adopt the ranking and selection approach to select the optimal incentive plan. We describe the system dynamics in detail, and formulate a profit maximization problem with a constraint on customer service level. Through numerical studies, we first establish that our procedure can select the optimal incentive plan in a wide range of scenarios. Second, under our incentive plan, the profit and service level can be improved significantly compared with the scenario without incentive provision. Third, in most cases, our procedure can achieve the optimal solution with a reasonable sample size.

We study the incentive design decision of a firm that outsources its online marketing and operational business lines to professional external and internal service providers under the principal-agent framework. Customer satisfaction is represented as the composite of the agents' sales and qualitycontrol efforts via the disconfirmation model, and is introduced into the demand model and incentive contracts. Two scenarios corresponding to whether the brand owner delegates business to a single agent or to multiple agents are studied. We derive the brand owner's optimal contracts and the agents' effort levels and conduct extensive sensitivity analyses regarding the influences of model parameters. We find that increases in the measure accuracy of customer satisfaction can bring significant benefit to the firm's profitability, and explore how it is affected by system factors. Specifically, the benefit is more substantial when the marginal cost of quality-control effort is relatively smaller than the marginal cost of sales effort. An interesting discovery is that the brand owner always earns more profit by outsourcing business to multiple agents than to a single agent, mainly because of his inflexibility in reaching a balance between inducing higher effort levels and providing a sufficient risk premium in the singe-agent case. This profit gap can be expanded by incentivizing both agents on customer satisfaction measures, and is shown quite significant under certain settings in the numerical studies.

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In some fully sequential ranking and selection procedures, such as the KN procedure and Rinott’s procedure, some initial samples must be taken to estimate the variance. We analyze the impact of the initial sample size (ISS) on the total sample size and propose an algorithm to calculate the ISS in this type of procedure. To better illustrate our approach, we implement this algorithm on the KN procedure and propose the KN-ISS procedure. Comprehensive numerical experiments reveal that this procedure can significantly improve the efficiency compared with the KN procedure and still deliver the desired probability of correct selection.

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