Decision Making under Uncertainty: Stochastic Model Forms
In deterministic management models it is assumed that all relevant problem characteristics are known with certainty (or that with respect to these characteristics sufficiently exact point estimates can be provided). Although this assumption can be essentially valid in connection with many engineering problems, it certainly does not hold automatically, for instance, in the context of environmental modelling and decision making. To illustrate this point, note that—even in reasonably ‘well-defined’ engineering systems—the expert estimates of system failure probabilities and consequences may differ by several orders of magnitude (especially in the case of ‘rare’ events with unforeseeable serious consequences).
KeywordsChance Constraint Stochastic Programming Model Implementation Aspect Recourse Model System Failure Probability
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