Simple math question

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GeXus
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Simple math question

Post by GeXus »

I'm implementing minFraud into an e-commerce system, and we're trying to decide what fraudScore to use.

minFraud has a little equation that they recommend using to help determine what you should go with:
At what threshold should I reject (or accept) an order?

You'll want to make sure that the average profit gained by accepting an order is greater than the average revenue lost by by accepting it. We've created a simplified formula to help you with this calculation. Please note that this is a generalization and does not apply in every case.

if (profit margin) * (100 - riskScore) + (fraud loss) * riskScore > 0 then process the order.

Here the profit margin is how much revenue you would generate by accepting the order net of the order fullfillment costs and the fraud loss is how much you would lose if the order were fraudulent (e.g. shipping, chargeback charge, cost of goods, etc.).

A riskScore is a score from 0 to 100.
if (profit margin) * (100 - riskScore) + (fraud loss) * riskScore > 0

With this formula, isn't it always greater than zero?

Example:
if (50) * (100 - 90) + (75) * 90 > 0

I'm getting 51750 - am I completely doing this wrong?
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John Cartwright
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Re: Simple math question

Post by John Cartwright »

The actual result would be 7250 (with a fraud score of 90).

(50) * (100 - 90) + (75) * 90
= 50 * 10 + 75 * 90
= 500 + 6750
= 7250

But yes, that formula does not make any sense (it is late here so maybe I'm missing something!)
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VladSun
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Re: Simple math question

Post by VladSun »

I'm almost sure it should be:
[text]profitMargin * (100 - riskScore) - fraudLoss * riskScore > 0[/text]
There are 10 types of people in this world, those who understand binary and those who don't
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Benjamin
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Re: Simple math question

Post by Benjamin »

I'm almost sure it should be:

Code: Select all

#pick up the phone and call the damn customer
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