Answer to Question #71751 in Statistics and Probability for mohammed

Question

An optimization model includes a chance constraint to satisfy demand of a particular product. The demand is uncertain and is modeled with an integer uniform distribution with parameter value of 0 and 4. That is, the probability that the demand is 0, 1, 2, 3, or 4 is exactly the same. A decision is made to order 2 units of the product from a supplier in order to satisfy the uncertain demand. What is the value at risk (VaR) for the demand constraint?

Answer 1

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