Multi-stage stochastic programming models for provisioning cloud computing resources

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Bülbül, Kerem and Noyan, Nilay and Erol, Hazal (2020) Multi-stage stochastic programming models for provisioning cloud computing resources. European Journal of Operational Research . ISSN 0377-2217 (Print) 1872-6860 (Online) Published Online First http://dx.doi.org/10.1016/j.ejor.2020.06.027

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Official URL: http://dx.doi.org/10.1016/j.ejor.2020.06.027


We focus on the resource provisioning problem of a cloud consumer from an Infrastructure-as-a-Service type of cloud. The cloud provider offers two deployment options, which can be mixed and matched as appropriate. Cloud instances may be reserved for a fixed time period in advance at a smaller usage cost per hour but require a full commitment and payment for the entire contract duration. In contrast, on-demand instances reflect a pay-as-you-go policy at a premium. The trade-off between these two options is rooted in the inherent uncertainty in demand and price and makes it attractive to complement a base reserved capacity with on-demand capacity to hedge against the spikes in demand. This paper provides several novel multi-stage stochastic programming formulations to enable a cloud consumer to handle the cloud resource provisioning problem at a tactical level. We first formulate the cloud resource provisioning problem as a risk-neutral multi-stage stochastic program, which serves as the base model for further modeling variants. In our second set of models, we also incorporate a certain concept of system reliability. In particular, chance constraints integrated into the base formulation require a minimum service level met from reserved capacity, provide more visibility into the future available capacity, and smooth out expensive on-demand usage by hedging against possible demand fluctuations. An extensive computational study demonstrates the value of the proposed models by discussing computational performance, gleaning practical managerial insights from the analysis of the solutions of the proposed models, and quantifying the value of the stochastic solutions.

Item Type:Article
Uncontrolled Keywords:OR in service industries; Multi-stage stochastic programming; Chance constraints; Cloud computing; Resource provisioning; On-demand instance; Reserved instance
Subjects:T Technology > T Technology (General) > T055.4-60.8 Industrial engineering. Management engineering
T Technology > T Technology (General) > T055.4-60.8 Industrial engineering. Management engineering > T57.6-57.97 Operations research. Systems analysis
ID Code:40094
Deposited By:Kerem Bülbül
Deposited On:14 Sep 2020 18:33
Last Modified:14 Sep 2020 18:33

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