Analysis Of An Inventory Model In Subscription-Based Rental Service With Two-Classes Of Customers

The paper offers a model and analysis of the rental process at a subscription-based business like Netflix. We analyze a priority scheduling scheme, currently in use, that gives priority to light renters over heavy renters and show that, in some situations, it may be more profitable for the firm to give priority to heavy renters. The optimal initial inventory decision is found for a simplified case. Extensions are briefly discussed.