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Suppose that as new connections are admitted and old ones terminate the mix of traf c remains near a point x on the boundary of A We call x the operating point We will shortly N N see that the acceptance region can be well approximated at x by one or more constraints N N like (43), and this constant i can be computed off-line as a function of x, the source traf c statistics, the capacity, buffer size and QoS required If a network has many links, connected in an arbitrary topology, then call admission is performed on a per route basis A route speci es an end-to-end path in the network A service contract is admitted over that route only if it can be admitted by each link of the route This may look like a simple extension of the single link case.

In the adaptive business network, Smart-and-Fresh is linked with its suppliers and the retail store it serves via uniform business processes and top-speed technology. The retail store sends Smart-and-Fresh hourly updates regarding how many chocolate chip cookies are selling at the same time that it sends this information to the chocolate chip supplier, the flour mill, and the dairy company. This enables all suppliers in the network to continuously adjust their production plans, and to keep on hand only the amount of cookies or ingredients they need.

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Two Seeking Partners for Greater Competitive Advantage 1. As cited by Eric Young, Web Marketplaces That Really Work, Fortune special edition (November 19, 2001). 2. Ibid. 3. Ibid. 4. Jupiter Media Metrix, Online Retailers Will Turn to Drop Shippers As Almost Half Lose Money on Shipping and Handling, press release (February 8, 2001), http:/ /www.jmm.com/xp/jmm/press/2001/pr_020801b .xml and as reported by Eric Young, Web Marketplaces That Really Work, Fortune special edition (November 19, 2001).

Recall that the problem of maximizing social welfare can be decentralized by presenting user i with a price C , where C is the shadow price of the constraint. Should one think of C as a congestion price It is certainly true that when xi increases there is a reduction in the amount of resource that remains for the other users, and so an increase in xi negatively impacts the bene ts they obtain. Nonetheless, we believe it is best to reserve the terminology of congestion price for circumstances in which xi appears explicitly in the utility of the other users, and there is no hard capacity constraint. It is still interesting to observe a close connection between the models. For purposes of illustration, consider a series of problems indexed by m D 1; 2; : : : , for which the utility D .m/ .y/xi . The interpretation of D .m/ .y/ is of the of user i is u i .xi ; y/ D ai log xi average amount of congestion cost incurred by user i for every unit of ow he sends to the network. For instance, it may be average delay suffered by every packet sent. Thus, D .m/ .y/xi represents the (average) congestion cost suffered this user when transmitting at total rate xi . The net utility of the user is the utility of transmitting at rate xi reduced by the cost due to performance degradation. Note that both terms must be measured in the same units. Now the problem of maximizing social welfare is maximize

However, the traf c that is generated by a contract of a certain type is accurately characterized by the traf c contract parameters only at the entrance point of the network Once this traf c travels inside the network, its shape changes because of interactions with traf c streams that share the same links In general, traf c streams modelled by stochastic processes are characterized by many parameters However, for call acceptance purposes, we seek a single parameter characterization, namely the i in constraint (43) We call i an effective bandwidth since it characterizes the resource consumption of a traf c stream of type i in a particular multiplexing context In the next sections we show how to derive effective bandwidths We consider their application to networks in Section 413 Finally, in Section 414, we suppose that a CAC is based on (43).

prices As you may imagine, time value can be a challenge to estimate in your head or on paper For that reason, options traders refer to mathematical models, implemented in computer programs, to compute the fair value of an option In the previous AOL example, we showed how an in-the-money option could be exercised to get into a stock position at below market price Now when would it make sense to exercise an out-of-the-money option Never To exercise an out-of-the-money call would be to pay more than the current market price for a stock To exercise an out-of-the-money put would be to sell a stock for less than the current market price of the stock Unless you like throwing money away, it never makes sense to exercise an out-of-the-money option In fact, it rarely makes sense to exercise an in-the-money option either.

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