mlsanityData to 14 Oct 2026

Iterate on an LLM, Serve on an SLM

arXiv 2610.14576 ↗First posted 10 Oct 2026cs.AI cs.MAcited by 0

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Abstract (arXiv)

As frontier LLMs gain more capabilities, the cost to run them also goes up. At the same time, small language models (SLMs) also gain more capabilities but have largely been able to keep their cost stable, offering 5-40 times cheaper inference for the narrow, repetitive subtasks that agents decompose work into. However, the standing limiting factor is getting the correct behavior out of a small model in a fast, efficient, and economical way. Unfortunately, in most cases, zero-shot small models fail narrow production tasks. Furthermore, retraining one every time the behavior changes is too slow to iterate on. We propose doing both in sequence. First, develop the desired behavior in prompt space, on a frontier model, with immediate feedback from live traffic. Then, once the behavior converges, distill the recorded production behavior (not synthetic imitations of it) into an SLM through supervised fine-tuning (SFT). We show a proper use case of this method through a scheduling agent for home-care agencies that fans out a single yes/no safety decision per caregiver-shift pair on GPT-5.4-nano. A LoRA-tuned Qwen3-8B trained on 11.6k recorded production decisions reaches 0.913 agreement, while the teacher (GPT-5.4-nano), re-run on its own recorded prompts, agrees with itself only 72.7% of the time, pointing to the fact that the SLM may also be more consistent. Furthermore, when the two disagreed, a blinded professional scheduler sided with the student 48-29. Finally, we find that the SLM has approximately 2.5 times lower median latency and is a fraction of the cost. We believe this lifecycle of quick building, live feedback, and cheap inference is a blueprint for others building similar systems.

Key facts. No citing papers in the map yet (data through 14 Oct 2026). Builds on 23 of its 27 references that are in the map. First posted on arXiv 10 Oct 2026.

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23 of 27 references.

References · 23

  1. 2015Distilling the Knowledge in a Neural Networkcited by 10,324
  2. 2023Judging LLM-as-a-Judge with MT-Bench and Chatbot Arenacited by 8,626
  3. 2022Self-Consistency Improves Chain of Thought Reasoning in Language Modelscited by 5,708
  4. 2022Self-Instruct: Aligning Language Models with Self-Generated Instructionscited by 2,724
  5. 2023ToolLLM: Facilitating Large Language Models to Master 16000+ Real-world APIscited by 1,947
  6. 2023Gorilla: Large Language Model Connected with Massive APIscited by 1,332
  7. 2019Self-training with Noisy Student improves ImageNet classificationcited by 1,311
  8. 2021A General Language Assistant as a Laboratory for Alignmentcited by 1,055
  9. 2023FrugalGPT: How to Use Large Language Models While Reducing Cost and Improving Performancecited by 853
  10. 2023Distilling Step-by-Step! Outperforming Larger Language Models with Less Training Data and Smaller Model Sizescited by 737
  11. 2024RouteLLM: Learning to Route LLMs with Preference Datacited by 682
  12. 2020Learning from Noisy Labels with Deep Neural Networks: A Surveycited by 582
11 more
  1. 2018Born Again Neural Networkscited by 546
  2. 2023Weak-to-Strong Generalization: Eliciting Strong Capabilities With Weak Supervisioncited by 467
  3. 2023Orca: Progressive Learning from Complex Explanation Traces of GPT-4cited by 379
  4. 2023AgentTuning: Enabling Generalized Agent Abilities for LLMscited by 338
  5. 2025Small Language Models are the Future of Agentic AIcited by 270
  6. 2024ToolACE: Winning the Points of LLM Function Callingcited by 216
  7. 2024APIGen: Automated Pipeline for Generating Verifiable and Diverse Function-Calling Datasetscited by 198
  8. 2022The 'Problem' of Human Label Variation: On Ground Truth in Data, Modeling and Evaluationcited by 139
  9. 2024TinyAgent: Function Calling at the Edgecited by 58
  10. 2025Distilling LLM Agent into Small Models with Retrieval and Code Toolscited by 47
  11. 2025Scaling Down, Serving Fast: Compressing and Deploying Efficient LLMs for Recommendation Systemscited by 2

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