A relatively straightforward convolution process does a sum, product, or other operation on two inputs that are known to be independent. In the case of unknown dependency, an optimization process is used to calculate strategic points on the envelopes describing the outputs. Extend ISU contract models with existing contingent strategies for risk management. First proposal for active bidding designs for generation companies in competitive generation units. Such projects are related to this project but do not include uncertainty on a contract or market basis while considering multiple market efficiency.
Risk management requires efficient contract trading through efficient, liquid markets.
However, when we apply such calculations to real world problems, precise values are frequently not justified by the knowledge available, and indeed may not be practically obtainable at all. Too often, the approach taken in such cases is to use precise values despite there being only approximations of unknown actual values. While this allows easy calculation of numerical outputs, those outputs generally deviate to a greater or lesser degree from the true values. Diverse techniques have been described for calculating with variables that are uncertain. Ideally, a technique should avoid approximating distributions used to describe uncertain inputs, because avoidance of approximation is the reason for applying such a technique in the first place.