A Recursive Approach to the Cumulant Method of Calculating Reliability and Production Cost

A new recursive approach to the Cumulant Method used in reliability index (LOLP and EUE) and production cost calculations is presented. The method allows to include any number of cumulants without additional explicit theoretical development or software implementation effort. A continuous probability model that approximates the available generating capacity is also introduced. Together, these two features permit a deeper and more exhaustive investigation of the convergence behavior and accuracy of the method. The results shed new light on when and how the cumulant method can be effectively used.