The moments and central moments of a compound distribution
2005 (English)In: European Journal of Operational Research, ISSN 0377-2217, Vol. 170, no 1, 106-119 p.Article in journal (Refereed) Published
The compound distribution is of interest for the study of production/inventory problems, since it provides a flexible description of the stochastic properties of the system. However, due to the difficulties involved in obtaining analytical results for the compound distribution, studies are usually limited to searching for a good approximation by replacing a more complex model with a simpler one applying only the first few moments as parameters. This paper presents general closed form formulae for the moments and central moments of any order of a compound distribution made up of non-negative stochastic variables. The Laplace and z-transform methods play an important role in this study. The importance of taking into consideration higher-order moments, when computing a safety factor for inventory control, is illustrated in a numerical example. © 2004 Elsevier B.V. All rights reserved.
Place, publisher, year, edition, pages
2005. Vol. 170, no 1, 106-119 p.
Engineering and Technology
IdentifiersURN: urn:nbn:se:liu:diva-36484DOI: 10.1016/j.ejor.2004.06.012Local ID: 31434OAI: oai:DiVA.org:liu-36484DiVA: diva2:257332