Modeling and Economic Analysis of the Cloud Brokering Platform Under Uncertainty: Choosing a Risk/Profit Trade-off

Authors:
Alexei A. Gaivoronski;Darijus Strasunskas;Per J. Nesse;Stein Svaet;Xiaomeng Su
Affiliations:
Norwegian University of Science and Technology, 7491 Trondheim, Norway;Norwegian University of Science and Technology, 7491 Trondheim, Norway;Telenor Research and Future Studies, N-1331 Fornebu, Norway;Telenor Research and Future Studies, N-1331 Fornebu, Norway;Telenor Research and Future Studies, N-1331 Fornebu, Norway
Venue:
Service Science
Year:
2013

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Abstract

This paper develops models for the analysis of a cloud brokering platform under conditions of risk and demand uncertainty, focusing on controlling the risk of not delivering the quality of service required by users. Such risk can occur as a result of inherent limitations of the best-effort connectivity. We take the approach of modern portfolio theory and show how the trade-off between risk and profit can be chosen by selecting efficient connectivity portfolios that combine the best-effort connectivity of different grades with premium-grade connectivity. We provide theoretical analysis of connectivity portfolio models and related insights delivered by numerical experiments that utilize the measurements of Internet traffic.