Part 2. MM4XL Tools > 1. Strategic Tools > Risk Analyst > 4. Functions > 3. Distribution Functions > mmPARETO2(Location, ModalValue)

Risk Analyst

mmPARETO2(Location, ModalValue)

Example

=mmPARETO2(3, 3) can equal 1.298089623.

Application

Also called Lomax or the Johnson Type VI, the class 2 Pareto distribution is often used in queue analysis, service-time distribution, network modeling, and discrete-event simulation. It behaves quite like the Pareto distribution, but has a larger domain.

How to use

This function can return extreme values starting from zero. Say we are modeling the mean number of active sessions at our website. From internal data we know that the average number of open sessions is 14. The formula below simulates the number of open sessions at a given time:

=mmPARETO2(2, 14)

Copy the formula above in 100 cells. You will find that it produces values with a mean equal to 14 as required in our formula and 75% of the simulated values lying below the 14 sessions. The extreme value we obtained with the formula above was 1260.3 sessions open at one time.

Technical profile

Type Continuous distribution.
Syntax =mmPARETO2(Location, ModalValue)
Domain  Monte Carlo Simulation Software: Management Process Risk Analysis
Mode 0.
Parameters Location = a > 0
ModalValue = c > 0
Remarks If any argument is nonnumeric mmPARETO2 returns the #VALUE! Error value.
Relationships It is related to the Exponential variate with parameter b = 1/c.
It is related to the Gamma and Chi2 variate.
Graphs
mmPARETO2(3, 3) mmPARETO2(30, 3)
 Monte Carlo Simulation Software: Management Process Risk Analysis  Monte Carlo Simulation Software: Management Process Risk Analysis
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