Pricing Model for a Computer Center

Yair M. Babad
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Yair M. Babad: University of Illinois at Chicago Circle, Chicago, Illinois

Operations Research, 1981, vol. 29, issue 1, 75-94

Abstract: Managers of computer systems are interested in increased utilization of their resources, which include processing (time) capacity and various storage devices, as well as in attracting more users and revenues. To increase utilization of the system, resources have to be rationed: users' processing has to be scheduled to less utilized time slots (that is, nonpeak hours), and storage and processing capacity have to be properly allocated. This rationing may be achieved by administrative ruling, which might aggravate users and reduce the attractiveness of the system, or by an appropriate pricing policy and free market forces. In this paper the second approach is considered, and a general equilibrium model which takes into account both the system needs and the users' cost and satisfaction is presented. The model is shown to fit many marketing situations, which extends its usability beyond the scope of computer systems. Two heuristic algorithms are used to solve this model: a cobweb type algorithm, and a modified Simplex algorithm. The use of the model is illustrated by an actual pricing problem at a university computing center.

Date: 1981
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