TITLE:  Dynamic Pricing  to Control Loss Systems with Quality of Service Targets

SPEAKER:  William A. Massey

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 price as a mechanism to control the utilization of the system. A manager goal is to find a pricing policy that maximizes 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.

Bio:
Dr. William A. Massey is Edwin S. Wilsey Professor of Operations Research and Financial Engineering at Princeton University. He received his PhD in 1981 from Stanford University. Prior to joining Princeton University, Bill has been a member of technical staff in the Mathematical Sciences Research Center at Bell Laboratories.
His research interests include Queueing Theory, Applied Probability, Stochastic Processes, Special Functions, and the Performance Modelling of Telecommunication Systems. He has published 50 papers in areas such as nonstationary queues, stochastic ordering, queueing networks, database theory, and wireless communications.