Online Resource Allocation Under Partially Predictable Demand

Dawsen Hwang (), Patrick Jaillet () and Vahideh Manshadi ()
Additional contact information
Dawsen Hwang: Google, Chicago, Illinois 60607
Patrick Jaillet: Department of Electrical Engineering and Computer Science, Laboratory for Information and Decision Systems, Operations Research Center, Massachusetts Institute of Technology, Cambridge, Massachusetts 02139
Vahideh Manshadi: Yale School of Management, New Haven, Connecticut 06511

Operations Research, 2021, vol. 69, issue 3, 895-915

Abstract: For online resource allocation problems, we propose a new demand arrival model where the sequence of arrivals contains both an adversarial component and a stochastic one. Our model requires no demand forecasting; however, because of the presence of the stochastic component, we can partially predict future demand as the sequence of arrivals unfolds. Under the proposed model, we study the problem of the online allocation of a single resource to two types of customers and design online algorithms that outperform existing ones. Our algorithms are adjustable to the relative size of the stochastic component; our analysis reveals that as the portion of the stochastic component grows, the loss due to making online decisions decreases. This highlights the value of (even partial) predictability in online resource allocation. We impose no conditions on how the resource capacity scales with the maximum number of customers. However, we show that using an adaptive algorithm—which makes online decisions based on observed data—is particularly beneficial when capacity scales linearly with the number of customers. Our work serves as a first step in bridging the long-standing gap between the two well-studied approaches to the design and analysis of online algorithms based on (1) adversarial models and (2) stochastic ones. Using novel algorithm design, we demonstrate that even if the arrival sequence contains an adversarial component, we can take advantage of the limited information that the data reveal to improve allocation decisions. We also study the classical secretary problem under our proposed arrival model, and we show that randomizing over multiple stopping rules may increase the probability of success.

Keywords: Optimization; online resource allocation; competitive analysis; analysis of algorithms (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (1)

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