A Multi-Attribute Service Portfolio Design Problem
Proceedings of the IEEE International Conference on Service OrientedComputing & Applications (SOCA 2011), Irvine, CA, US, (2011)Abstract
Increasing popularity of cloud-based services has led to the emergence
of cloud marketplaces where services from different providers are offered, usually
in the form of a catalog.
The customers' decision about buying offered services is based on idiosyncratic
preferences regarding non-functional service attributes, e.g., price, provider
reputation, and quality of service. Customer preferences are typically unknown
to providers at the time the service portfolio (i.e. quality and price choices)
is specified. Thus, from a microeconomic perspective, we have to deal with
information asymmetry in markets, which complicates the challenge of finding
the profit maximizing service portfolio.
This paper presents a generic economic framework based on customer self-selection
to address the above-mentioned optimization for a cloud service provider. The
contribution is two-fold: We characterize a multi-attributive customer preference
function for cloud services based on a continuum of potential customers. Thereby
each infinitesimal demand of a customer is characterized by a vector of minimum
quality values for each of the different attributes and a maximum willingness
to pay. The demand framework addresses the phenomenon of product cannibalization.
We then formulate the service providers' optimal service portfolio design. This
grants the provider maximal profit through optimal combination of potential
values of the chosen attributes.
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