Hello everybody,
I'm using the NORMINV() function to calculate likely random outcomes of specific variables in a Monte Carlo simulation. (Modeling this after the example from the excellent book, How To Measure Anything.)
However, NORMINV() uses standard distribution. What if my distribution is not standard?
For example, I'm doing a Monte Carlo for how much a house might sell for. The max expected value is $950,000 and the min value is $850,000. However, the likeliest outcome is not in the middle, but slightly lower -- $875,000 rather than the mean of $900,000.
If it was a standard distribution, I would use the formula =NORMINV (RAND(), mean sale price, (max price - min price)/3.29)
So I can't use NORMINV to calculate this. Any idea how I would model this calculation instead?
I'm using the NORMINV() function to calculate likely random outcomes of specific variables in a Monte Carlo simulation. (Modeling this after the example from the excellent book, How To Measure Anything.)
However, NORMINV() uses standard distribution. What if my distribution is not standard?
For example, I'm doing a Monte Carlo for how much a house might sell for. The max expected value is $950,000 and the min value is $850,000. However, the likeliest outcome is not in the middle, but slightly lower -- $875,000 rather than the mean of $900,000.
If it was a standard distribution, I would use the formula =NORMINV (RAND(), mean sale price, (max price - min price)/3.29)
So I can't use NORMINV to calculate this. Any idea how I would model this calculation instead?