The Recursion Formulae for the Log Normal Distribution

Abstract

In this chapter we shall substitute the log normal distribution into the recursion formulae derived in Chap. 4. Although the log normal distribution is somewhat less easy to handle than the normal distribution, the methods that are used to reduce the recursion formulae to a more simple form, so that they easily can be calculated, are similar to those of the previous chapter. In this sense, the chapter thus contains no extensions of the theory developed so far. The decision to pay nevertheless some attention to the log normal distribution, however, was mainly taken on the basis of practical considerations. The distribution has namely a rather large field of application since it approximates very well the distribution of demand of a wide variety of different product properties. Moreover, the log normal distribution is often more suited to describe the demand for a product property because it is not defined for negative demands.