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CCF Seminar
William Massey
Princeton University
Title: Dynamic Pricing to Control Loss Systems with Quality of Service Targets

Abstract: Consider a real time service where arriving customers make their decision to join the system based on both the availability of resources and the current service price. Given a fixed number resources, the manager can use dynamic pricing as a mechanism to control the utilization of the system. A manager's goal is to find a pricing policy that maximizes the total revenue while meeting the quality of service targets (i.e. the probability of congestion) desired by the customers.

Using variational calculus techniques, we solve the dynamic optimal control problem that results by approximating a dynamic rate, multi-server loss model as one with a constrained offered load . We do this by using customer demand forecasts to anticipate future service blocking and then implement a congestion pricing algorithm. This is joint work with Robert C. Hampshire of Carnegie Mellon University and Qiong Wang of Bell Labs.

Date: Monday, March 21, 2011
Time: 5:00 pm
Location: Wean Hall 6423
Submitted by:  Steve Shreve