Pricing and admission control for shared computer services using the token bucket mechanism

This dissertation presents and analyzes token-bucket pricing schemes for shared resources. This research is motivated by the computer services industry, where services are provided mostly on a dedicated basis. However, leading computer companies such as HP and IBM forecast that external service providers will share resources between customers, in order to realize economies of scale. Two of the challenges faced by providers and consumers of shared services are admission control and pricing. In order to allow sellers to guarantee service levels, we recommend that pricing schemes for shared resources include admission controls. The implementation of such schemes requires understanding of buyers' and sellers' actions and a characterization of the admission control. This dissertation reviews the computer services supply-chain and proposes a five-step procedure for analyzing the pricing of shared services. Then it extends the usage of token-bucket and token-bucket-with-rate-control admission controls to pricing schemes. We show that for the token-bucket (token-bucket-with-rate-control) mechanism the bucket level behaves as a two- (one-) sided regulated random walk. Thus, the performance analysis (loss sales or backlog) is identical to the analysis of threshold crossing probabilities of regulated random walks. This dissertation's main contribution is an upper bound on the probability of a two-sided regulated random walk being on its "rare" boundary. Using the bounds developed, we solve constrained or relaxed versions of the buyer's problem. For the token-bucket-with-rate-control pricing scheme and exponential demand the buyer's problem can be solved in closed form.

Department dc:contributor.department

Sloan School of Management.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2003

Author dc:creator

• Baron, Opher, 1970-

Advisor dc:contributor.advisor

• Gabriel R. Bitran, Dirk Beyer, Stephen C. Graves, and Yashan Wang.

• Sloan School of Management.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/16634

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/16634