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In class, we talked about risk pooling. We used an example where the standard deviations of two demand points were 3 and 4, respectively. For
In class, we talked about risk pooling. We used an example where the standard deviations of two demand points were 3 and 4, respectively. For the combined demand point, it was 5. What assumption about these two demand streams makes this calculation correct? What might cause the impact of the risk pooling to be not as large as suggested by this calculation?
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