Maximizing Cloud Provider Profit from Equilibrium Price Auctions

Auctioning constitutes a market-driven scheme for the allocation of cloud-based computing capacities. It is practically applied today in the context of Infrastructure as a Service offers, specifically, virtual machines. However, the maximization of auction profits poses a challenging task for the cloud provider, because it involves the concurrent determination of equilibrium prices and distribution of virtual machine instances to the underlying physical hosts in the data center. In the work at hand, we propose an optimal approach, based on linear programming, as well as a heuristic approach to tackle this Equilibrium Price Auction Allocation Problem (EPAAP). Through an evaluation based on realistic data, we show the practical applicability and benefits of our contributions. Specifically, we find that the heuristic approach reduces the average computation time to solve an EPAAP by more than 99.9%, but still maintains a favorable average solution quality of 96.7% in terms of cloud provider profit, compared to the optimal approach.