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It's a cost model, they probably have a coefficient for what % of people they think will wait vs. go elsewhere while the website is down. When you're running a
by kyllo 7y ago
It's a cost model, they probably have a coefficient for what % of people they think will wait vs. go elsewhere while the website is down. When you're running a retail company, you have to at least attempt to quantify lost sales in order to model your business.
There's no way to measure lost sales with high accuracy, but that's not really the point, because it's most useful for modeling decisions and policies in a forward-looking context. Future revenue forecasts, the other term in the equation you're optimizing, are also inaccurate.
These functions are also generally "bathtub" shaped, and with the amount of money at stake, you can save quite a lot by being a little closer to the optimum, so they're worthwhile.