A Brief Primer on Probability Distributions

6 Pages Posted: 21 Oct 2008

See all articles by Phillip E. Pfeifer

Phillip E. Pfeifer

University of Virginia - Darden School of Business

Abstract

This four-page technical note provides information about five probability distributions. The note describes the parametrics of each distribution, the moments of each distribution, and the important properties of each distribution.

Excerpt

UVA-QA-0517

Rev. Jun. 30, 2010

A Brief Primer on Probability Distributions

We use the language of probability to talk intelligently about uncertain events: At “Freemark Abbey Winery,” there is a 0.6 probability of mold if it rains.

The language of probability works well when describing an uncertain quantity, which can take on only a few possible values: In “Galaxy Micro Systems,” regional office sales with the major purchase will be 2,000 units with a probability of 0.2; 3,000 units with a probability of 0.4; and 4,500 units with a probability of 0.4.

When the uncertain quantity can take on many possible values, we describe it using a probability distribution: In the “Galaxy Micro Systems Addendum,” regional office sales with the major purchase will follow the triangular probability distribution with a minimum of 1,000 units, a most likely of 3,000 units, and a maximum of 6,000 units.

. . .

Keywords: forecasting

Suggested Citation

Pfeifer, Phillip E., A Brief Primer on Probability Distributions. Darden Case No. UVA-QA-0517. Available at SSRN: https://ssrn.com/abstract=1283434

Phillip E. Pfeifer (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4803 (Phone)

HOME PAGE: http://www.darden.virginia.edu/faculty/Pfeifer.htm

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