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Mathematical Problems in Engineering
Volume 2015, Article ID 783149, 21 pages
http://dx.doi.org/10.1155/2015/783149
Research Article

Dynamic Pricing of a Web Service in an Advance Selling Environment

1Department of Industrial Engineering, Iran University of Science and Technology, Narmak, Tehran 1684613114, Iran
2Karaj Islmic Azad University, Narmak, Tehran 1684613114, Iran

Received 5 April 2014; Revised 8 August 2014; Accepted 18 August 2014

Academic Editor: Pandian Vasant

Copyright © 2015 Ehram Safari et al. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

Consider a web service with different quality of service levels where users may purchase their required web service through a reservation system. The service provider adjusts prices of web service classes over a prespecified time horizon to manage demand and maximize profit. Users may cancel their services as long as they pay a penalty. One of the important challenges for service providers is capacity limitation of the resources employed in offering the web service. Thus, taking this important proposition into account makes pricing strategies considered by the provider has more credit. Another important factor in determining pricing strategies discussed in the present paper is the market influence which can increase or decrease the price that the provider offers. This paper develops a continuous time optimal control model for identifying pricing strategies for the web service classes. We study the optimality condition of the considered model based on maximum principal and propose an algorithm to obtain the optimal pricing policy. Moreover, we perform numerical analyses to evaluate the effect of some parameters on control and state variables and objective function. In addition, we compare the proposed algorithm with genetic algorithm (GA) and simulated annealing (SA) available in Matlab.