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The value of reliability

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  • Fosgerau, Mogens
  • Karlström, Anders

Abstract

We derive the value of reliability in the scheduling of an activity of random duration, such as travel under congested conditions. We show that the minimal expected cost is linear in the mean and standard deviation of duration, regardless of the form of the standardized distribution of durations. This insight provides a unification of the scheduling model and models that include the standard deviation of duration directly as an argument in the cost or utility function. The results generalize approximately to the case where the mean and standard deviation of duration depend on the starting time. Empirical illustration is provided.

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File URL: http://mpra.ub.uni-muenchen.de/5733/
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File URL: http://mpra.ub.uni-muenchen.de/42274/
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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 5733.

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Date of creation: 13 Nov 2007
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Handle: RePEc:pra:mprapa:5733

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Related research

Keywords: Welfare; Random duration; Time; Scheduling; Reliability; Variability;

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  26. repec:ebl:ecbull:v:12:y:2007:i:4:p:1-7 is not listed on IDEAS
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