Pricing surplus server capacity for mean waiting time sensitive customers |
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Authors: | Sudhir K Sinha N Rangaraj N Hemachandra |
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Institution: | 1. Complex Decision Support Systems, TATA Consultancy Services Ltd., Mumbai 400 093, India;2. Industrial Engineering and Operations Research, Indian Institute of Technology Bombay, Mumbai 400 076, India |
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Abstract: | We consider a queueing model wherein the resource is shared by two different classes of customers, primary (existing) and secondary (new), under a service level based pricing contract. This contract between secondary class customers and resource manager specifies unit admission price and quality of service (QoS) offered. We assume that the secondary customers’ Poisson arrival rate depends linearly on unit price and service level offered while the server uses a delay dependent priority queue management scheme. We analyze the joint problem of optimal pricing and operation of the resource with the inclusion of secondary class customers, while continuing to offer a pre-specified QoS to primary class customers. Our analysis leads to an algorithm that finds, in closed form expressions, the optimal points of the resulting non-convex constrained optimization problem. We also study in detail the structure and the non-linear nature of these optimal pricing and operating decisions. |
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Keywords: | Queueing Quality of service Dynamic priority schemes Linear demand function Non-convex constrained optimization |
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