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We consider a single‐server discrete queueing system in which arrivals occur according to a Markovian arrival process. Service is provided in groups of size no more than M customers. The service times are assumed to follow a discrete phase type distribution, whose representation may depend on the group size. Under a probabilistic service rule, which depends on the number of customers waiting in the queue, this system is studied as a Markov process. This type of queueing system is encountered in the operations of an automatic storage retrieval system. The steady‐state probability vector is shown to be of (modified) matrix‐geometric type. Efficient algorithmic procedures for the computation of the rate matrix, steady‐state probability vector, and some important system performance measures are developed. The steady‐state waiting time distribution is derived explicitly. Some numerical examples are presented.
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