Optimal Scheduling and Incentive Compatible Pricing for a Service System with Quality of Service Guarantees

Authors:
Vernon N. Hsu;Susan H. Xu;Boris Jukic
Affiliations:
Department of Decision Sciences and Managerial Economics, Faculty of Business Administration, The Chinese University of Hong Kong, Shatin, New Territories, Hong Kong;Department of Supply Chain and Information Systems, Smeal College of Business, Pennsylvania State University, University Park, Pennsylvania 16802;School of Business, Clarkson University, Potsdam, New York 13699
Venue:
Manufacturing & Service Operations Management
Year:
2009

Citing 15
Cited 3

Pricing computer services: queueing effects

Communications of the ACM
An Incentive Compatible Flow Control Algorithm for Rate Allocation in Computer Networks

IEEE Transactions on Computers
M/G/c queueing systems with multiple customer classes: characterization and control of achievable performance under nonpreemptive priority rules

Management Science
Optimal incentive-compatible priority pricing for the M/M/1 queue

Operations Research
User delay costs and internal pricing for a service facility

Management Science
Multiclass queueing systems: polymatroidal structure and optimal scheduling control

Operations Research - Supplement to Operations Research: stochastic processes
Optimal expulsion control: a dual approach to admission control of an ordered-entry system

Operations Research
Information Technology and Time-Based Competition in Financial Markets

Management Science
Incentive-compatible pricing for a service facility with joint production and congestion externalities

Management Science
Dynamic Pricing for Network Service: Equilibrium and Stability

Management Science
Internet pricing with a game theoretical approach: concepts and examples

IEEE/ACM Transactions on Networking (TON)
Optimal Pricing of Priority Services

Operations Research
Optimal Pricing That Coordinates Queues with Customer-Chosen Service Requirements

Management Science
Price and Service Discrimination in Queuing Systems: Incentive Compatibility of Gcµ Scheduling

Management Science
Pricing congestible network resources

IEEE Journal on Selected Areas in Communications

A mechanism for pricing and resource allocation in peer-to-peer networks

Electronic Commerce Research and Applications
Bounded Rationality in Service Systems

Manufacturing & Service Operations Management
Incentive-Compatible Revenue Management in Queueing Systems: Optimal Strategic Delay

Manufacturing & Service Operations Management

Quantified Score

Hi-index	0.00

Visualization

Abstract

This paper proposes a resource allocation and pricing mechanism for a service system that serves multiple classes of jobs within an organization. Each class of service request is subject to a class-dependent quality of service (QoS) guarantee on the expected delay bound, which may be imposed by business rules in an organization or other application-specific technical constraints. We develop an extension of a resource allocation and pricing mechanism for an M/M/1 system. In contrast to the system without the QoS guarantee, where a fixed priority scheduling policy---known as the cμ rule---is optimal, we show that the system may need to adopt a more general randomized priority scheduling policy to maximize the overall system profit. We also develop a transfer pricing scheme that is both optimal and incentive compatible, allowing users to act in their self-interests while collectively achieving the system optimum. We show that the pricing scheme with the QoS guarantee depends on the scheduling policy implemented and has different characteristics from that without the QoS guarantee.