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Her Majesty The Queen has invited Royals from all over Europe to a garden party at Windsor castle on 28th October 2013 (~20 miles west of London). Your team is responsible for the weather prediction and decision to have an outdoor party for this event. You have 3-4 days to plan for the event. You can use the data and macros provided to you to first derive probabilities of severe weather at this location (this doesn't need to be exact so use the information for Reading). ii) The price of ordering the marquees and outdoor catering for the event is £100,000. Chances of the marquees falling apart when winds > 10m/s = 20% probability ; winds > 20m/s = 40% ; winds > 30m/s = 80%. Now what would the probabilities of the marquees failing be, given this new information from the rental service and the weather prediction you made? This type of problem is often discussed in terms of risk, or the idea of the cost/loss ratio of a user. Here the loss (L) would be some financial value that would be at loss if the bad weather forecast event happens and no precautionary actions had been taken. The costs (C) would be the financial value associated with precautionary actions in case the event happens. The ratio of the costs to the loss, often called C/L ratio, could then be used for decision making by users. If the costs are substantially smaller than the potential loss, then already a relatively small forecast probability for the event would indicate to take precautionary actions. Whereas for large C/L this is less, or not at all, the case. |
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