The effects of qos level degradation cost on provider selection and task allocation model in telecommunication networks

Firms acquire network capacity from multiple suppliers which offer different Quality of Service (QoS) levels. After acquisition, day-to-day operations such as video conferencing, voice over IP and data applications are allocated between these acquired capacities by considering QoS requirement of each operation. In optimal allocation scheme, it is generally assumed each operation has to be placed into resource that provides equal or higher QoS Level. Conversely, in this study it is showed that former allocation strategy may lead to suboptimal solutions depending upon penalty cost policy to charge degradation in QoS requirements. We model a cost minimization problem which includes three cost components namely capacity acquisition, opportunity and penalty due to loss in QoS.