Abstract:
This paper proposes a new approach to risk
assessment of strategies based on the Total Time on Test (TTT)
transform techniques. A new concept of risk of loss is
introduced, whose value is determined by potential losses and
corresponding probabilities of all unfavourable cases. It is
closely related to the maximum acceptable (cost) value (MAV)
set by a decision maker. How to calculate the value of risk of
loss for a given strategy and a MAVis described in depth and a
final formula is derived. The values of risk of loss of different
strategies can be used for comparisons of these strategies in
terms of overall potential losses for the purpose of assisting
decision makers in choosing a better strategy. The results of
this method can provide specific infonnation about the risk of
loss of a strategy. Two examples are used to demonstrate the
usage of this method. The scaled TTI plot method and this risk
of loss method are applied to the example A and the results of
both methods agree with each other. In the example B to which
the scaled TTT method is not applicable, the risk of loss method
can provide reasonable solutions. This new method can be used
for other situations in which the TIT concepts are valid.
