November 12, 2014

Optimal admission control for many-server systems with QED-driven revenues

We have submitted Optimal admission control for many-server systems with QED-driven revenues, and it is currently under review. It is joint work between Jaron Sanders, Sem Borst, Johan van Leeuwaarden, and Guido Janssen.


We consider Markovian many-server systems with admission control operating in a QED regime, where the relative utilization approaches unity while the number of servers grows large, providing natural Economies-of-Scale. In order to determine the optimal admission control policy, we adopt a revenue maximization framework, and suppose that the revenue rate attains a maximum when no customers are waiting and no servers are idling. When the revenue function scales properly with the system size, we show that a nondegenerate optimization problem arises in the limit. Detailed analysis demonstrates that the revenue is maximized by nontrivial policies that bar customers from entering when the queue length exceeds a certain threshold of the order of the typical square-root level variation in the system occupancy. We identify a fundamental equation characterizing the optimal threshold, which we extensively leverage to provide broadly applicable upper/lower bounds for the optimal threshold, establish its monotonicity, and examine its asymptotic behavior, all for general revenue structures. For linear and exponential revenue structures, we present explicit expressions for the optimal threshold.

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