Microsoft Office Tutorials and References

In Depth Information

**Using NORM. DIST and POISSON. DIST to Determine Probabilities**

Excel provides you with the NORM.DIST function for calculating probabilities

from a normal distribution. The function takes four arguments:

✓
The first argument is the value for which you want to calculate a

probability.

✓
The second argument is the mean of the normal distribution.

✓
The third argument is the standard deviation of the normal distribution.

✓
The fourth argument is TRUE if you want the cumulative probability and

FALSE if you want the noncumulative probability.

Acumulative probability
is the chance of getting any value between 0 and the

specified value. A
noncumulative probability
is the chance of getting exactly

the specified value.

Normal distributions come into play for a wide variety of measurements.

Examples include blood pressure, atmospheric carbon-dioxide levels, wave

height, leaf size, and oven temperature. If you know the mean and standard

deviation of a distribution, you can use NORM.DIST to calculate related

probabilities.

Here’s an example: Your firm manufactures hardware, and a customer wants

to buy a large quantity of 50mm bolts. Due to the manufacturing process,

the length of bolts varies slightly. The customer will place the order only if

at least 95 percent of the bolts are between 49.9mm and 50.1mm. Measuring

each one isn’t practical, but previous data show that the distribution of bolt

lengths is a normal distribution with a mean of 50 and a standard deviation of

0.05. You can use Excel and the NORM.DIST function to answer the question.

Here’s the plan:

1. Use the NORM.DIST function to determine the cumulative probability

of a bolt being at least 50.1mm long.

2. Use the NORM.DIST function to determine the cumulative probability

of a bolt being at least 49.9mm long.

3. Subtract the second value from the first to get the probability that a

bolt is between 49.9mm and 50.1mm long.

Here are the steps to follow:

1. In a new worksheet, enter the values for the mean, standard

deviation, upper limit, and lower limit in separate cells.

Optionally, add adjoining labels to identify the cells.

2. In another cell, enter
=NORM.DIST(
to start the function entry.