Take Action

Home | Faculty & Research Overview | Research

Research Details

Failure Rate and Generalized Increasing Failure Rate for Discrete Distributions

Abstract

Lariviere and Porteus (2001) introduced the concept of an increasing generalized failure rate (IGFR) for continuous random variables. This property has proven useful in pricing, revenue and supply chain management problems because it both implies the uniqueness of the global maximum and offers a certificate for optimality. Further, it has a relevant economic interpretation as the elasticity of demand. Here, we introduce a discrete version of the generalized failure rate that offers comparable properties to those of the continuous version. This novel definition unifies the theory of IGFR, and further expands its scope of application. Additionally, we show the IGFR property for a widely used class of demand distribution - the compound Poisson distributions.

Type

Working Paper

Author(s)

Martin Lariviere, Zuo-Jun (Max) Shen

Date Published

2017

Citations

Lariviere, Martin, and Zuo-Jun (Max) Shen. 2017. Failure Rate and Generalized Increasing Failure Rate for Discrete Distributions.

KELLOGG INSIGHT

Explore leading research and ideas

Find articles, podcast episodes, and videos that spark ideas in lifelong learners, and inspire those looking to advance in their careers.
learn more

COURSE CATALOG

Review Courses & Schedules

Access information about specific courses and their schedules by viewing the interactive course scheduler tool.
LEARN MORE

DEGREE PROGRAMS

Discover the path to your goals

Whether you choose our Full-Time, Part-Time or Executive MBA program, you’ll enjoy the same unparalleled education, exceptional faculty and distinctive culture.
learn more

Take Action