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Optimal investment, pricing and replacement of computer resources

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  • Charles H. Kriebel
  • Anthony A. Atkinson
  • Huntley W. H. Zia

Abstract

The problem of multiple‐resource capacity planning under an infinite time horizon is analyzed using a nonlinear programming model. The analysis generalizes to the long term the short‐run pricing model for computer networks developed in Kriebel and Mikhail [5]. The environment assumes heterogeneous resource capacities by age (vingate), which service a heterogeneous and relatively captive market of users with known demand functions in each time period. Total variable operating costs are given by a continuous psuedoconcave function of system load, capacity, and resource age. Optimal investment, pricing, and replacement decision rules are derived in the presence of economies of scale and exogenous technological progress. Myopic properties of the decision rules which define natural (finite) planning subhorizons are discussed.

Suggested Citation

  • Charles H. Kriebel & Anthony A. Atkinson & Huntley W. H. Zia, 1977. "Optimal investment, pricing and replacement of computer resources," Naval Research Logistics Quarterly, John Wiley & Sons, vol. 24(4), pages 537-547, December.
    • Handle: RePEc:wly:navlog:v:24:y:1977:i:4:p:537-547
    DOI: 10.1002/nav.3800240403
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