Function Design for Improved Competitive Ratio in Online Resource Allocation with Procurement Costs

• URL: http://arxiv.org/abs/2012.12457v1
• Date: Wed, 23 Dec 2020 02:32:47 GMT
• Title: Function Design for Improved Competitive Ratio in Online Resource Allocation with Procurement Costs
• Authors: Mitas Ray, Omid Sadeghi, Lillian J. Ratliff, Maryam Fazel
• Abstract summary: We study the problem of online resource allocation, where multiple customers arrive the seller must allocate resources to each incoming customer while also facing a procurement cost for the total allocation.
• Score: 16.68130648568593
• License: http://arxiv.org/licenses/nonexclusive-distrib/1.0/
• Abstract: We study the problem of online resource allocation, where multiple customers arrive sequentially and the seller must irrevocably allocate resources to each incoming customer while also facing a procurement cost for the total allocation. Assuming resource procurement follows an a priori known marginally increasing cost function, the objective is to maximize the reward obtained from fulfilling the customers' requests sans the cumulative procurement cost. We analyze the competitive ratio of a primal-dual algorithm in this setting, and develop an optimization framework for synthesizing a surrogate function for the procurement cost function to be used by the algorithm, in order to improve the competitive ratio of the primal-dual algorithm. Our first design method focuses on polynomial procurement cost functions and uses the optimal surrogate function to provide a more refined bound than the state of the art. Our second design method uses quasiconvex optimization to find optimal design parameters for a general class of procurement cost functions. Numerical examples are used to illustrate the design techniques. We conclude by extending the analysis to devise a posted pricing mechanism in which the algorithm does not require the customers' preferences to be revealed.

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