mytest > help > Part 2. MM4XL Tools > 1. Strategic Tools > Risk Analyst > 4. Functions > 3. Distribution Functions > mmGAUSSINV (Mean, Scale)

Risk Analyst

mmGAUSSINV (Mean, Scale)

Example

=mmGAUSSINV(1, 1) can equal 0.444967568.

Application

Also called the Walds distribution, this distribution is mainly used in sequential analysis. It is often employed to test scientific models of unknown nature, to evaluate risk in the stock market, the price of a financial derivative, or, more generally, response time such as the lifetime of a component. The failure rate of this function increases until maximum is reached and then decreases towards the zero value as the lifetime approaches infinity.

How to use

This function models response time in sequential patterns. Say we are modeling the web surfing behavior of car buyers searching for information. From past experience we know that the number of links (pages) a visitor follows in a website before jumping to the next website is about 3 (although 1 page is the modal value) while the maximum number of pages visited is about 100. This surfing behavior can be modeled with:

=mmGAUSSINV(3, 6)

Copy the formula above in 100 cells. You will find that most simulated values will score around 1.5 rather than 3, as stated with the Mean parameter, and this is compatible with web surfing behavior. Our personal experience suggests that the Scale parameter can occasionally be found with the square root of the term (MaxValue / 3), where MaxValue stands for the largest number of, in this case, visits to pages of one individual website.

Technical profile

Type Continuous distribution.
Syntax =mmGAUSSINV(Mean, Scale)
Domain  Monte Carlo Simulation Software: Management Process Risk Analysis.
Mode  Monte Carlo Simulation Software: Management Process Risk Analysis.
Parameters Mean = mu > 0
Scale = b > 0
Remarks If any argument is nonnumeric mmGAUSSINV returns the #VALUE! error value.
Relationships It is related to the Chi2 variate with 1 degree of freedom.
Graphs
mmGAUSSINV(1, 1) mmGAUSSINV(1, 10)
 Monte Carlo Simulation Software: Management Process Risk Analysis  Monte Carlo Simulation Software: Management Process Risk Analysis
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