Optimal Sequential Production Under Uncertainty

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Optimal Sequential Production Under Uncertainty
Warren H Hausman
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, and thus Z. Cannot be a variate J J distributed precisely according to the two-parameter Lognormal distribution indicated above. However, since the constant term (a, = R. -/R ) is known, the three-parameter Lognormal distribution described in reference [1] may be considered. In this distribution the quantity (Z, - a. ) is distributed as two-parameter Lognormal, with the third parameter merely shifting the distribution upward so that the lower bound of the distribution of Z is a. Rather than z...ero. Intuitively, the reason for the excellent fit of the two- parameter Lognormal distribution to the apparel forecasting data cited in [6] is due to the fact that the dispersion of the distribution of Z was not excessive relative to the lower bound. For example, in the J apparel data the ratio (R^ i /^) "^^ approximately . 90, but the dispersion in Z-j ^ was consistent with . 90 being an approximate lower bound. In other words, because of the limited dispersion of Z. , it turned out that the lower bound was very close to the zeroth percentile of the distribution in its two- parameter form.

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