Leveraging Slack Capacity in IaaS Contract Cloud Services

38 Pages Posted: 27 Sep 2015 Last revised: 14 Jan 2016

See all articles by Linna Du

Linna Du

University of Connecticut - Department of Operations & Information Management

Manuel Nunez

University of Connecticut - Department of Operations & Information Management

Xue Bai

Temple University - Fox School of Business and Management

Date Written: May 25, 2015

Abstract

This paper develops pricing and capacity planning models for a cloud provider taking into account the trade-off between service reliability and capacity utilization. The provider's objectives are to optimally allocate resources, price different types of cloud services, and ultimately extract the maximum revenue from the market. We first analyze two basic types of cloud services: contract and on-demand. We then propose hybrid models in which the two basic services simultaneously exist. For each hybrid model, we determine an optimal capacity planning strategy, optimal reservation fee, optimal per-usage fee, and corresponding service reliability. We conduct experiments to study how optimal solutions change with respect to critical system parameters such as service rate, market size, and service reliability. Our work provides a framework for resource allocation, service provision, and strategic planning in cloud computing practice.

Keywords: cloud computing, contract service, on-demand service, hybrid service, resource utilization, reliability

Suggested Citation

Du, Linna and Nunez, Manuel and Bai, Xue, Leveraging Slack Capacity in IaaS Contract Cloud Services (May 25, 2015). Available at SSRN: https://ssrn.com/abstract=2665796 or http://dx.doi.org/10.2139/ssrn.2665796

Linna Du

University of Connecticut - Department of Operations & Information Management ( email )

368 Fairfield Road
Storrs, CT 06269-2041
United States

Manuel Nunez

University of Connecticut - Department of Operations & Information Management ( email )

368 Fairfield Road
Storrs, CT 06269-2041
United States

Xue Bai (Contact Author)

Temple University - Fox School of Business and Management ( email )

Philadelphia, PA 19122
United States

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