A Simple Approximation to the Convolution of Gamma Distributions (Revision of DP 2006-27)

T. Stewart, L.W.G. Strijbosch, J.J.A. Moors, P. van Batenburg

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Abstract

The exact expressions for the convolutions of gamma distributions with different scale parameters is quite complicated. The approximation by means of another gamma distribution is shown to be remarkably accurate for wide ranges of the parameter values, especially if more than two random variables are involved. The approximation is particularly good for the upper quantiles that play an important role in auditors' decisions.
Original languageEnglish
Place of PublicationTilburg
PublisherOperations research
Number of pages24
Volume2007-70
Publication statusPublished - 2007

Publication series

NameCentER Discussion Paper
Volume2007-70

Keywords

  • approximating distributions
  • convolution
  • gamma distribution

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