Efficient frontier plot

Tables 6.3-6.5 show the computational results for Risk Model II over a range of values of risk parameter 02 with respect to different recourse penalty costs, for three representative cases of 0 = 1E — 10, IE — 7, and 1.55E — 5, respectively. An example of the detailed results is presented in Table 6.6 for 02 = 50 of the first case. Figure 6.2 illustrates the corresponding efficient frontier plot for Risk Model II while Figure 6.3 provides the plot of the expected profit for different levels of risk.

Figure 6.2 Risk Model II efficient frontier plot.

From Table 6.7 and the corresponding efficient frontier plot in Figure 6.4, similar trends to Risk Model II (and also the expected value models) are observed in which decreasing values of 0 correspond to higher expected profit until a certain constant profit value is attained ( 81 770). The converse is also true in which a constant profit of 59330 is reached in the initially declining expected profit for increasing values of 0i. 

Figure 6.4 Risk Model III efficient frontier plot.

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