Want to work with gamma probability distributions? Microsoft Excel supplies some useful functions, as this short article illustrates.

Want to work with gamma probability distributions? But a quick explanation is order if you're not familiar with this powerful statistical concept and technique. Here's the situation: If a Poisson process produces successes at a constant rate of m per unit of time, then the random variable x, the elapsed time until the rth success, follows the gamma distribution.

The gamma distribution is often used to determine the amount of time it takes for the rth person to arrive in a line.

If you know x and want to find the probability, you use the GAMMADIST function, which has the following syntax:

=GAMMADIST(x, alpha, beta, cumulative)

For example, if x equals 25, alpha equals 8, beta equals 9, and cumulatative is TRUE, you use the following formula:

=GAMMADIST (25,8,9,TRUE)

The function returns the value 0.007774.

If you have been given a probability and want to find x, you use the GAMMAINV function, which has the following syntax:

=GAMMAINV (probability, alpha, beta)

For example, if the probability equals .5, alpha equals 8, and beta equals 9, you use the following formula:

=GAMMAINV (.5,8,9)

The function returns the value 69.02.

You use the GAMMALN function to find the natural logarithm of the gamma function, G(x). The GAMMALN function uses the following syntax:

=GAMMALN(x)

For example, if x equals 25, you use the following formula:

=GAMMALN(25)

The function returns the value 54.78.

Stephen L. Nelson, CPA wrote the MBA's Guide to Microsoft Excel, from which this short article is adapted. Nelson also writes and edits downloadable do-it-yourself small business incorporation kits that businesses and investors can use for setting up a Maryland S Corporation or a Massachusetts S Corporation

Source: www.articlealley.com