Near-Optimal Bayesian Online Assortment of Reusable Resources: the hybrid simulation-based algorithm is (1 − min{1/2, ε*(c_min)})-competitive against the Bayesian expected LPResearch Paper
Motivation
Rental platforms, cloud computing, hotel and car-rental systems, and on-demand services all sell access to reusable resources: a unit that is rented comes back after a random rental duration and can be rented again. When such a platform displays a menu of products (an assortment) to each arriving customer, it faces an online decision problem: offering a product now earns a fee, but ties up a unit that a later, more valuable customer might have wanted. Feng, Niazadeh and Saberi study this problem in a Bayesian setting, where customer types are drawn from known distributions, and give an algorithm whose expected revenue is within a factor of an LP upper bound on any online policy (arXiv:2512.06997; Operations Research, 2024). The factor tends to as the smallest inventory grows and never drops below .
Earlier work on online assortment of reusable resources (Gong, Goyal, Iyengar, Simchi-Levi, Udwani and Wang, Management Science 2021; Goyal, Iyengar and Udwani, arXiv:2002.02430) studied the prior-free, adversarial setting, in which fees and rental-duration distributions are type-independent and identical across time. The Bayesian model here lets both depend on the customer type.
Setting
There are products; product has identical units, and . Customers arrive at times . Customer has a type , drawn independently from a known distribution on a finite set. A type fixes
- a choice model : the probability that a customer of type rents product when offered the assortment (with probability she rents nothing);
- fees ;
- rental-duration distributions on ; write .
Assortments come from a family that is downward closed (Assumption 2), and choice models are weakly substitutable (Assumption 1): , and adding a product to an assortment never increases the choice probability of another. A rented unit with duration is unavailable at times ; a product with no unit on hand cannot be offered.
The benchmark is the Bayesian expected LP Expected-LP: with the probability of offering to type at time , maximize subject to each product's inventory holding in expectation at every time, , and . Let be an optimal solution with , and
All algorithms of the paper follow one template: at time , sample ; for each , discard if it has no unit on hand and otherwise according to a per-product discarding rule; then offer a random subset of the survivors drawn by sub-assortment sampling (Procedure 1). Algorithm 2 discards at random with probability . Algorithm 3 keeps only if its fee exceeds a threshold computed from an optimistic per-unit dynamic program (equation (3)). Sim+Hybrid(i) chooses, product by product, between the two rules by comparing with .
Formalization targets
Goal: Theorem 3
For every instance and every optimal normalized ,
Milestones
- Proposition 3: sub-assortment sampling returns with for every .
- Lemma EC.2: the multiplicative Chernoff bound (already posed on the platform; referenced).
- (EC.2): a randomly discarded product has no unit on hand with probability at most .
- Per-product bound in the proof of Theorem 1: .
- Theorem 1: Algorithm 2 with is -competitive.
- and its minimizers are .
- Lemma EC.3: the per-unit revenue-to-go of Algorithm 3 from any inventory state is at least .
- Part (ii) of the proof of Theorem 2: (LP contribution of ).
- Theorem 2: Algorithm 3 is -competitive.
- is continuous and nonincreasing, , .
Significance
The result gives a single polynomial-time policy that is simultaneously -competitive, which is optimal for small inventories (a two-period example on p. 17 shows no online policy does better against this LP), and asymptotically optimal as inventories grow. Its analysis is modular: each product is treated separately, which is what allows mixing two discarding rules in one algorithm. Sub-assortment sampling is of independent use whenever an assortment must be thinned without distorting the choice probabilities of the remaining products.
The paper's proofs are on paper only; the per-product decoupling, which the paper invokes in a few lines for Theorem 3, is exactly the kind of step a formal proof makes explicit. A complete development produces a reusable finite model of a Bayesian online rental process (types, simulated assortments, discarding, choices and durations), a verified sub-assortment sampler, and an LP-duality certificate for the optimistic DP. None of these results is formalized elsewhere.
Difficulty
The obvious argument fails at the first step: whether product is available at time depends on all earlier rentals, and the offer probabilities of different products are correlated through the shared assortment and through substitution, so rental indicators are neither independent nor product-separable. Two ingredients are needed. Sub-assortment sampling must make each product's selection probability exactly its LP target, whatever happened to the other products; only then can the rentals of product be coupled with an independent sequence for a concentration bound (EC.2). For small inventories, a concentration bound is too weak, and the analysis instead compares the true process with the optimistic DP by backward induction over inventory states (Lemma EC.3), then bounds the DP against the LP with an explicit dual solution (Part (ii)).
Formalization scope
Everything is finite: products are Fin n (the paper's product is index ), times are , types range over one finite type space (the paper's as subsets), and durations lie in . The online process is a product of explicit per-step kernels over finite sample paths; probabilities and expectations are finite sums, with no measure theory. Conventions committed to:
- is a sub-probability supported on for ; weak substitutability is required when ; is nonempty and downward closed;
- , , ;
- a unit rented at is out at iff its duration exceeds , matching in the LP; for ;
- the competitive ratio is for every optimal with ;
- Procedure 1 breaks ties among equal ratios by product index, and its recursive step uses the products of largest ratio;
- the page does not say which discarding probability a "large inventory" product uses; it is a minimizer of (1) at ;
- the page calls "monotone increasing"; the formalized statement is nonincreasing, which is what the proof uses;
- running-time claims are not formalized.
The process is not allowed to rent a unit that is not on hand, the post-processing targets are (not , which would make sub-assortment sampling the identity), and the path law uses the same as the benchmark; any formalization that drops one of these makes the goal a statement about a different process. Milestones 3, 4, 7 and 8 are stated for any feasible normalized and arbitrary rules for the other products, which is the generality Theorem 3's proof needs.
Contributions welcome: lemmas on the process (normalization of the path law, the marginal law of one product's rentals), the Chernoff bound, and analytic facts about .
Selected references
- Y. Feng, R. Niazadeh, A. Saberi, Near-Optimal Bayesian Online Assortment of Reusable Resources, Operations Research (Technical Note), 2024; arXiv:2512.06997v1. https://arxiv.org/abs/2512.06997
- V. Goyal, G. Iyengar, R. Udwani, Online Allocation of Reusable Resources: Achieving Optimal Competitive Ratio, arXiv preprint, 2020. https://arxiv.org/abs/2002.02430
- V. Goyal, G. Iyengar, R. Udwani, Online Allocation of Reusable Resources via Algorithms Guided by Fluid Approximations, arXiv preprint, 2020 (an idea similar to sub-assortment sampling, found concurrently). https://arxiv.org/abs/2010.03983
- H. Chernoff, A Measure of Asymptotic Efficiency for Tests of a Hypothesis Based on the Sum of Observations, Annals of Mathematical Statistics, 1952. https://doi.org/10.1214/aoms/1177729330