Inventory theory applied to cost optimization in cloud computing

Andrea Nodari, Jukka K. Nurminen, Christian Frühwirth

Research output: Chapter in Book/Report/Conference proceedingConference contributionScientificpeer-review

3 Citations (Scopus)


Cloud computing providers offer two different pricing schemes when renting virtual machines: reserved instances and ondemand instances. On-demand instances are paid only when utilized and they are useful to satisfy a fluctuating demand. Conversely, reserved instances are paid for a certain time period and are independent of usage. Since reserved instances require more commitment from users, they are cheaper than on-demand instances. However, in order to be cost-effective compared to on-demand instances, they have to be extensively utilized. This work focuses on finding the optimal combination of on-demand and reserved instances, such that the demand is satisfied and the costs minimized. To achieve this goal, this study introduces a stochastic model of the resources, based on Inventory Theory. The idea is to formulate the optimization problem as an inventory-keeping problem and then derive the optimal strategy. The paper evaluates the proposed model using data from an industry case, comparing the performance with a brute-force approach. The conducted experiments show that the Inventory Theory model provides accurate results and potentially allows prior research on Inventory Theory to be applied to optimal cloud provisioning.

Original languageEnglish
Title of host publication2016 Symposium on Applied Computing, SAC 2016
Number of pages4
ISBN (Electronic)9781450337397
Publication statusPublished - 4 Apr 2016
MoE publication typeA4 Article in a conference publication
EventACM Symposium On Applied Computing
- Pisa, Italy
Duration: 4 Apr 20168 Apr 2016
Conference number: 31


ConferenceACM Symposium On Applied Computing
Abbreviated titleSAC


  • Cloud provisioning
  • Cost optimization
  • Inventory Theory
  • Resource allocation

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