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Revenue maximization of Internet of things provider using variable neighbourhood search

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Abstract

Internet of things (IoT) covers various aspects of collecting and exchanging data between diverse entities. From IoT provider’s perspective, one of the most significant issues is how to set the price that maximizes its revenue while meeting users’ requirements. In this paper, we focus on revenue maximization of the IoT service provider by applying pay per use pricing within the combinatorial sealed-bid auction. Pay per use pricing option implies that each user is charged per unit of consumption according to the actual usage. We assume that a user pays a threshold price for a unit of consumption, which is determined based on the auction. The auction is conducted with bidding prices set up in advance within service level agreement (SLA). We use variable neighbourhood search (VNS) in order to derive the optimal threshold price that maximizes IoT provider’s revenue, and users’ satisfaction. In addition, the optimization within the auction mechanism is conducted using different metaheuristics, which are compared with two types of VNS algorithms.

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Acknowledgements

This publication is partially supported by the Ministry of Education, Science and Technological Development of the Republic of Serbia. This publication is partially supported by the Khalifa University of Science and Technology under Award No. RC2 DSO.

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Authors and Affiliations

  1. Faculty of Traffic and Transport Engineering, University of Belgrade, Vojvode Stepe 305, Belgrade, 11000, Serbia

    Vesna Radonjić Ɖogatović, Marko Ɖogatović & Milorad Stanojević

  2. Department of Industrial and Systems Engineering, Research Center on Digital Supply Chain and Operations Management, Khalifa University, Abu Dhabi, UAE

    Nenad Mladenović

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  1. Vesna Radonjić Ɖogatović
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  2. Marko Ɖogatović
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  3. Milorad Stanojević
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  4. Nenad Mladenović
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Correspondence to Vesna Radonjić Ɖogatović.

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Radonjić Ɖogatović, V., Ɖogatović, M., Stanojević, M. et al. Revenue maximization of Internet of things provider using variable neighbourhood search. J Glob Optim 78, 375–396 (2020). https://doi.org/10.1007/s10898-020-00894-z

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