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Introduction
If you work with random data of any kind, you can use the probability distributions to measure the uncertainty and deal with risk affecting your business. There are many different probability distributions developed by statisticians to model random data of different kinds, ranging from business data, finance data (stock prices) to engineering data (system failures) and environmental data (maximum wind speeds, flood flows).
EasyFitXL includes over 55 distributions covering most real world applications. For each distribution, EasyFitXL provides several functions to be used in your Excel sheets. These functions allow you to obtain comprehensive information on any distribution, and thus on the underlying random process you are modelling.
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6/14/2011
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This will copy the selected models to the Clipboard in the required format, so you can paste them directly into a worksheet using the standard Excel Paste option. top
Similarly, the Probability Density Function, PDF(x), can be defined as A 1 2 Normal(1;0) =DistPdf(A1;1.5)
where 1.5 is the x-value at which you want to calculate the PDF(x). The table below lists some other supported distribution functions: Description Probability Density Function Cumulative Distribution Function Inverse Cumulative Distribution Function Survival Function Hazard Function Mode (most likely value) Mean (expected value) Variance Function Name & Arguments =DistPdf(Distribution;x) =DistCdf(Distribution;x) =DistInv(Distribution;P) =DistSurv(Distribution;x) =DistHaz(Distribution;x) =DistMode(Distribution) =DistMean(Distribution) =DistVar(Distribution)
Some functions such as the mean, variance, PDF, and CDF are available in a simplified form for your convenience. For example, rather than having to specify the Normal(1;0) distribution in one cell and the sheet function =DistMean in another, you can just enter =NormalMean(1;0) in a single cell, and that will return exactly the same value. top
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6/14/2011
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will return the value of 0.9332 in cell A2, indicating the probability a random variate X (following the specified Normal distribution) is less than 1.5: P(Xx) = P(X1.5) = 0.9332. There is also a simplified version of this function: A 1 2 =NormalCdf(1.5;1;0)
Note that the x-value has to be specified before the distribution parameters in this case. For details on using the Cumulative Distribution Function. see calculating probabilities.
This will return the value of 0.5244 in cell A2, indicating the fixed x-value (x=0.5244) such that P(Xx)=0.7, where X is a normally distributed random variate, and P=0.7 is a predefined probability value. In other words, given the P-value, this function returns the corresponding x-value - that is why it is called the Inverse CDF. The Inverse CDF has a simplified version as well: A 1 2 When using the simplified version of the ICDF worksheet function, the P-value needs to go first in the argument list. See also making estimates & projections for a more detailed description and real world applications of this function. top =NormalInv(0.7;1;0)
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6/14/2011
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=LognormalVar(1;1) =LognormalStdev(1;1)
The distribution mode and mean are perhaps the most useful statistics indicating the most likely value and the average value of your data respectively. While both the distribution variance and the standard deviation indicate the spread of your data around the average value, the standard deviation is more useful, since it has the same units as the original variable and can be easier to interpret for this reason.
Learn More
See EasyFitXL online help on worksheet functions for a complete list of supported functions and additional examples. top
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http://www.mathwave.com/articles/probability-distributions-excel.html
6/14/2011