How Uber and Lyft can minimize waits

Sep 05, 2019

Sections Strategy Video

Collections Operations Management

No one likes a wait. And few businesses are as vulnerable to this aversion as ride-sharing services, whose customers can easily cancel a ride if a driver can't arrive quickly enough. So should Uber and Lyft always send riders the driver who’s closest? Not necessarily, according to Koç University’s Erhun Özkan and Chicago Booth’s Amy R. Ward. The researchers developed an algorithm that takes demand information into account to allocate drivers efficiently across a service area. The matches the algorithm produces may mean some customers have slightly longer waits than they would if the nearest driver picked them up—but other customers’ waits will be driven down, and more customers overall will face satisfactory wait times for their rides.