Revenue maximization of Internet of things provider using variable neighbourhood search

Vesna Radonjić Ɖogatović (), Marko Ɖogatović, Milorad Stanojević and Nenad Mladenović
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Vesna Radonjić Ɖogatović: University of Belgrade
Marko Ɖogatović: University of Belgrade
Milorad Stanojević: University of Belgrade
Nenad Mladenović: Khalifa University

Journal of Global Optimization, 2020, vol. 78, issue 2, No 7, 375-396

Abstract: Abstract Internet of things (IoT) covers various aspects of collecting and exchanging data between diverse entities. From IoT provider’s perspective, one of the most significant issues is how to set the price that maximizes its revenue while meeting users’ requirements. In this paper, we focus on revenue maximization of the IoT service provider by applying pay per use pricing within the combinatorial sealed-bid auction. Pay per use pricing option implies that each user is charged per unit of consumption according to the actual usage. We assume that a user pays a threshold price for a unit of consumption, which is determined based on the auction. The auction is conducted with bidding prices set up in advance within service level agreement (SLA). We use variable neighbourhood search (VNS) in order to derive the optimal threshold price that maximizes IoT provider’s revenue, and users’ satisfaction. In addition, the optimization within the auction mechanism is conducted using different metaheuristics, which are compared with two types of VNS algorithms.

Keywords: Variable neighbourhood search; Metaheuristics; Auction; Revenue; Internet of things (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s10898-020-00894-z

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