Design a regional surge pricing strategy

Q: Design a regional surge pricing strategy

This is a System Design interview question from OpenAI for Machine Learning Engineer roles. View the full question and solution on PracHub.

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Question

Scenario

You operate a ride-hailing platform. You need to design a system that sets surge multipliers (dynamic pricing) for a given region.

Task

Design:

A pricing strategy that balances rider experience, driver supply, and marketplace efficiency.
A production system that computes and applies surge in near real time.

Requirements

Update every 1–5 minutes.
Prevent extreme volatility (surge spikes/flapping).
Be robust to fraud and sudden demand shocks (events, weather).
Provide explainability and monitoring.

Deliverables

Modeling approach and control logic.
Data inputs and architecture.
Metrics and experimentation plan.
Safety constraints and edge cases.

Design a regional surge pricing strategy

Scenario

Task

Requirements

Deliverables

Solution

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