Abstract
This paper is concerned with the resource allocation problem in the design of virtual private networks (VPNs) with unicast and multicast connections. The objective is to maximize the total network revenue that depends on blockings of unicast and multicast connections. Requests to set up connections are blocked if there is not enough available bandwidth on the links of the infrastructure network, e.g. an IP/MPLS network. We develop an approximate method to allocate bandwidth to VPNs based on revenue sensitivities calculation. Revenue sensitivities are calculated taking into account implied costs - the expected revenue loss due to the capacity reduction when a new unicast or multicast connection is set up.
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