Dynamic bidding strategies in search-based advertising

Cataloged from PDF version of article.Search-based advertising allows the advertisers to run special campaigns targeted to different groups of potential consumers at low costs. Google, Yahoo and Microsoft advertising programs allow the advertisers to bid for an ad position on the result page of a user's query when the user searches for a keyword that the advertiser relates to its products or services. The expected revenue generated by the ad depends on the ad position, and the ad positions of the advertisers are concurrently determined after an instantaneous auction based on the bids of the advertisers. The advertisers are charged only when their ads are clicked by the users. To avoid excessive ad expenditures due to sudden surges in the keyword-search activities, each advertiser reserves a fixed finite daily budget, and the ads are not shown in the remainder of the day when the budget is depleted. Arrival times of keyword-search instances, ad positions, ad selections, and sales generated by the ads are random. Therefore, an advertiser faces a dynamic stochastic total net revenue optimization problem subject to a strict budget constraint. Here we formulate and solve this problem using dynamic programming. We show that there is always an optimal dynamic bidding policy. We describe an iterative numerical approximation algorithm that uniformly converges to the optimal solution at an exponential rate of the number of iterations. We illustrate the algorithm on numerical examples. Because dynamic programing calculations of the optimal bidding policies are computationally demanding, we also propose both static and dynamic alternative bidding policies. We numerically compare the performances of optimal and alternative bidding policies by systematically changing each input parameter. The relative percentage total net revenue losses of the alternative bidding policies increases with the budget loading, but were never more than 3.5 % of maximum expected total net revenue. The best alternative to the optimal bidding policy turned out to be a static greedy bidding policy. Finally, statistical estimation of the model parameters is visited

A make-to-stock mountain-type inventory model

We consider the buffer content of a fluid queue or storage process. The buffer content varies in a way that depends on the state of an underlying three-state Markov process. In state 0 the buffer content increases at a rate a(x) that is a function of the current buffer level x; in states 1 and 2 it decreases linearly, with different speeds. We study the steady-state buffer content, by using level crossing theory and by exploiting relations between the fluid queue and queues with instantaneous input and/or output

A make-to-stock mountain-type inventory model

We consider the buffer content of a fluid queue or storage process. The buffer content varies in a way that depends on the state of an underlying three-state Markov process. In state 0 the buffer content increases at a rate a(x) that is a function of the current buffer level x; in states 1 and 2 it decreases linearly, with different speeds. We study the steady-state buffer content, by using level crossing theory and by exploiting relations between the fluid queue and queues with instantaneous input and/or output

Evolutionary dynamic optimisation of airport security lane schedules

The file attached to this record is the author's final peer reviewed version. The Publisher's final version can be found by following the DOI link.Reducing costs whilst maintaining passenger satisfaction is an important problem for airports. One area this can be applied is the security lane checks at the airport. However, reducing costs through reducing lane openings typically increases queue length and hence passenger dissatisfaction. This paper demonstrates that evolutionary methods can be used to optimise airport security lane schedules such that passenger dissatisfaction and staffing costs can be minimised. However, it is shown that these schedules typically over-fit the forecasts of passenger arrivals at security such that in actuality significant passenger delays can occur with deviations from the forecast. Consequently, this paper further demonstrates that dynamic evolutionary re-optimisation of these schedules can significantly mitigate this over-fitting problem with much reduced passenger delays

Stochastic make-to-stock inventory deployment problem: an endosymbiotic psychoclonal algorithm based approach

Integrated steel manufacturers (ISMs) have no specific product, they just produce finished product from the ore. This enhances the uncertainty prevailing in the ISM regarding the nature of the finished product and significant demand by customers. At present low cost mini-mills are giving firm competition to ISMs in terms of cost, and this has compelled the ISM industry to target customers who want exotic products and faster reliable deliveries. To meet this objective, ISMs are exploring the option of satisfying part of their demand by converting strategically placed products, this helps in increasing the variability of product produced by the ISM in a short lead time. In this paper the authors have proposed a new hybrid evolutionary algorithm named endosymbiotic-psychoclonal (ESPC) to decide what and how much to stock as a semi-product in inventory. In the proposed theory, the ability of previously proposed psychoclonal algorithms to exploit the search space has been increased by making antibodies and antigen more co-operative interacting species. The efficacy of the proposed algorithm has been tested on randomly generated datasets and the results compared with other evolutionary algorithms such as genetic algorithms (GA) and simulated annealing (SA). The comparison of ESPC with GA and SA proves the superiority of the proposed algorithm both in terms of quality of the solution obtained and convergence time required to reach the optimal/near optimal value of the solution

Robustness and evolutionary dynamic optimisation of airport security schedules

Reducing security lane operations whilst minimising passenger waiting times in unforseen circumstances is important for airports. Evolutionary methods can design optimised schedules but these tend to over-fit passenger arrival forecasts resulting in lengthy waiting times for unforeseen events. Dynamic re-optimisation can mitigate for this issue but security lane schedules are an example of a constrained problem due to the human element preventing major modifications. This paper postulates that for dynamic re-optimisation to be more effective in constrained circumstances consideration of schedule robustness is required. To reduce over-fitting a simple methodology for evolving more robust schedules is investigated. Random delays are introduced into forecasts of passenger arrivals to better reflect actuality and a range of these randomly perturbed forecasts are used to evaluate schedules. These steps reduced passenger waiting times for actual events for both static and dynamic policies with minimal increases in security operations

Capillary condensation in disordered porous materials: hysteresis versus equilibrium behavior

We study the interplay between hysteresis and equilibrium behavior in capillary condensation of fluids in mesoporous disordered materials via a mean-field density functional theory of a disordered lattice-gas model. The approach reproduces all major features observed experimentally. We show that the simple van der Waals picture of metastability fails due to the appearance of a complex free-energy landscape with a large number of metastable states. In particular, hysteresis can occur both with and without an underlying equilibrium transition, thermodynamic consistency is not satisfied along the hysteresis loop, and out-of-equilibrium phase transitions are possible.Comment: 4 pages, 4 figure