Mixed integer programming model for pricing in telecommunication

Authors:
Mustapha Bouhtou;Jean-Robin Medori;Michel Minoux
Affiliations:
Mustapha Bouhtou, Orange Labs, Issy-Les-Moulineaux Cedex 9, France;Mustapha Bouhtou, Orange Labs, Issy-Les-Moulineaux Cedex 9, France;UPMC, LIP6, Paris Cedex 5, France
Venue:
INOC'11 Proceedings of the 5th international conference on Network optimization
Year:
2011

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Abstract

Yield management has been successfully applied in the context of airline companies. However, so far, application to telecommunication industry have been scarce. Using Yield management principles, this paper investigates the new problem of maximizing revenue of telecommunications operator by setting prices on voice services. This pricing is based on available resource i.e. network load. We first propose a Mixed Integer Program to model this problem. Then we study the particular case where demand and load are linear functions of price. Using numerical results, we also study the impact of a Big M constant on computational effort required to solve the problem.