Title: Potential benefit, potential loss and potential gain from competing opportunity and failure events

Authors: M.T. Todinov

Addresses: Department of Mechanical Engineering and Mathematical Sciences, School of Technology, Oxford Brookes University, Oxford, Wheatley, OX33 1HX, UK

Abstract: A quantitative framework is presented dealing with competing opportunity and failure events in a finite time interval. The framework is based on the new fundamental concepts potential benefit, potential loss and potential gain, for which closed-form expressions regarding their distributions are derived and verified by a simulation. It is demonstrated that a decision strategy based on multiple event occurrences yields a very different gain compared with a decision strategy based on the next event occurrence. The results are illustrated by examples supporting decision making.

Keywords: production availability; failure; opportunity; potential benefit; potential gain; potential loss; reward; risk assessment; risk management; simulation; decision making.

DOI: 10.1504/IJRAM.2008.021052

International Journal of Risk Assessment and Management, 2008 Vol.10 No.1/2, pp.1 - 30

Published online: 01 Nov 2008 *

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