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Modeling and Economic Analysis of the Cloud Brokering Platform Under Uncertainty: Choosing a Risk/Profit Trade-off

Author

Listed:
  • Alexei A. Gaivoronski

    (Norwegian University of Science and Technology, 7491 Trondheim, Norway)

  • Darijus Strasunskas

    (Norwegian University of Science and Technology, 7491 Trondheim, Norway)

  • Per J. Nesse

    (Telenor Research and Future Studies, N-1331 Fornebu, Norway)

  • Stein Svaet

    (Telenor Research and Future Studies, N-1331 Fornebu, Norway)

  • Xiaomeng Su

    (Telenor Research and Future Studies, N-1331 Fornebu, Norway)

Abstract

This paper develops models for the analysis of a cloud brokering platform under conditions of risk and demand uncertainty, focusing on controlling the risk of not delivering the quality of service required by users. Such risk can occur as a result of inherent limitations of the best-effort connectivity. We take the approach of modern portfolio theory and show how the trade-off between risk and profit can be chosen by selecting efficient connectivity portfolios that combine the best-effort connectivity of different grades with premium-grade connectivity. We provide theoretical analysis of connectivity portfolio models and related insights delivered by numerical experiments that utilize the measurements of Internet traffic.

Suggested Citation

  • Alexei A. Gaivoronski & Darijus Strasunskas & Per J. Nesse & Stein Svaet & Xiaomeng Su, 2013. "Modeling and Economic Analysis of the Cloud Brokering Platform Under Uncertainty: Choosing a Risk/Profit Trade-off," Service Science, INFORMS, vol. 5(2), pages 137-162, June.
    • Handle: RePEc:inm:orserv:v:5:y:2013:i:2:p:137-162
    DOI: 10.1287/serv.2013.0047
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