Abstract
In this study, we proposed a game-theory based framework to model the dynamic pricing process in the cloud manufacturing (CMfg) system. We considered a service provider (SP), a broker agent (BA), and a dynamic service demander (SD) population that is composed of price takers and bargainers in this study. The pricing processes under linear demand and constant elasticity demand were modeled, respectively. The combined effects of SD population structure, negotiation, and demand forms on the SP’s and the BA’s equilibrium prices and expected revenues were examined. We found that the SP’s optimal wholesale price, the BA’s optimal reservation price, and posted price all increase with the proportion of price takers under linear demand but decrease with it under constant elasticity demand. We also found that the BA’s optimal reservation price increases with bargainers’ power no matter under what kind of demand. Through analyzing the participants’ revenues, we showed that a dynamic SD population with a high ratio of price takers would benefit the SP and the BA.
Highlights
The emergence of cloud manufacturing (CMfg) enables manufacturing capacities and resources to be traded in the form of service in a cloud environment
We considered a service provider (SP), a broker agent (BA), and a dynamic service demander (SD) population that is composed of price takers and bargainers in this study
Through analyzing the participants’ revenues, we showed that a dynamic SD population with a high ratio of price takers would benefit the SP and the BA
Summary
The emergence of cloud manufacturing (CMfg) enables manufacturing capacities and resources to be traded in the form of service in a cloud environment. SD population structure and user negotiation behavior should be considered in selection of service prices Another factor that is directly related to price policy in a cloud environment is the demand form. There has been a lack of study analyzing how SD population structure (i.e., the relative proportions of price takers and bargainers), negotiation behavior, and demand forms jointly affect service pricing in a cloud environment. To examine the combined effects of SD population structure, negotiation, and demand forms on SP’s and BA’s pricing strategies, the dynamic pricing processes under linear demand and constant elasticity demand are modeled, respectively. Our main contribution is to show how the impacts of SD population structure and negotiation on SP’s and BA’s equilibrium prices and expected revenues depend on different demand models in a CMfg system with a dynamic SD population.
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