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WHAT IS A UNIT OF CAPACITY WORTH?

Published online by Cambridge University Press:  10 October 2002

B.A. Chiera  and
P.G. Taylor
B.A. Chiera
Affiliation:
Department of Applied Mathematics, University of Adelaide, Adelaide, South Australia, E-mail: [email protected]
P.G. Taylor
Affiliation:
Department of Applied Mathematics, University of Adelaide, Adelaide, South Australia, E-mail: [email protected]
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Abstract

Consider a finite-capacity telecommunications link to which connection requests arrive in a Poisson process. Each connection carried on the link earns a certain amount of revenue for the link's manager. Now, assume that the manager is offered the opportunity to buy or sell a unit of the link's allocated capacity. Assuming that the manager has a knowledge of the current number of connections on the link, we demonstrate a method of calculating the buying and selling prices.

Type
Research Article
Information
Probability in the Engineering and Informational Sciences , Volume 16 , Issue 4 , October 2002 , pp. 513 - 522
Copyright
© 2002 Cambridge University Press

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