This calculator allows you to determine the threshold probability for making a weather-sensitive decision using a probabilistic forecast. For background information about this computation, refer to
this document.
First, identify a weather event that adversely affects the financial outcome of your business activity. A forecast of the probability of this event occurring must be available. Then compute the following three pieces of financial information for your business:
- L is the loss that will occur if business proceeds as normal, but the unfavorable weather event occurs.
- P is the profit that will occur if business proceeds as normal, and favorable weather occurs.
- C is the cost of disrupting or postponing business in anticipation of unfavorable weather