Managing surges in online demand using bandwidth throttling: An optimal strategy amid the COVID-19 pandemic

Varun Gupta and Sandun Perera

Transportation Research Part E: Logistics and Transportation Review, 2021, vol. 151, issue C

Abstract: Managing supply chains requires quick access to the enterprise– and customer–facing online network applications and transparency of data across supply chains. While it is challenging to meet the rapidly growing demand for bandwidth to support supply chain applications in the Blockchain era, the COVID-19 pandemic has triggered bandwidth demand surges across all online services such as the internet, content delivery, e-platforms, and social media. A sudden demand surge may impel users to lose their access or have a poor online experience due to bandwidth throttling by their Online Service Providers (OSPs). Earlier work on optimal throttling mechanism under stochastic demand has overlooked such demand surges. In this paper, we recast the user demand to adequately capture the demand surges, such as home bandwidth demand surges during the COVID-19 pandemic. Specifically, we model the user demand as a geometric Lévy (jump–diffusion) process. Within our general setting, we show that it is optimal for the OSP to follow a modified control-band policy that encompasses the existing results as a special case. Our numerical study not only enhances the current insights about the optimal throttling mechanism by including demand surges but also provides new insights concerning the nature of demand surges. For example, our study suggests that OSPs should initiate demand throttling at relatively lower usage levels if the likelihood of having demand surges is high; furthermore, we find that when OSPs are exposed to demand surges with higher intensities, it is optimal for them to wait until the usage level reaches a relatively high level before throttling it.

Keywords: Surge demand management; COVID-19; Stochastic impulse control; Jump diffusions; IS-OM interface (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (2)

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DOI: 10.1016/j.tre.2021.102339

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