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.