Title: Robust Pricing of Monopolistic Cloud Computing Services with Service Level Agreements
Speaker: Vladimir Roitch
Affiliation: Department of Computing – Imperial College London
Location: CPSE seminar room (C615 Roderic Hill)
Time: 4:30pm

Abstract. Cloud Computing is a new computing paradigm that gives end-users on-demand access to computing resources of companies that maintain large data centres. Here, we address the optimal pricing of cloud computing services from the perspective of a monopolistic service provider that needs to manage demand responsiveness and uncertainty. We formulate the pricing problem for on-demand services as a multi-stage stochastic program and model service level agreements via chance constraints. Under weak assumptions about the demand uncertainty we show that the resulting model can be reduced to an equivalent two-stage stochastic program. As cloud computing is only just emerging, it is impossible to reliably estimate demand distributions from historical data. Indeed, such data may even be difficult to collect. We address this type of model uncertainty by adopting a distributionally robust approach, assuming that only information about the location, size and support (but not the shape) of the demand distribution is available. We show that the arising robust model can be reformulated as a second-order cone program, and we analytically derive the worst-case distributions. Several extensions of the basic model are discussed. First, we study generalized models in which higher-order moments of the demand distribution are known. Next, we include multiple products and account for different product qualities. Finally, we investigate the possibility of selling unused capacity (if any) on a spot market.

About the speaker.