Building Probability Models in Excel Part 4: Discrete Random Variables
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The viewer will learn how to use the =DISCRINV command to create a discrete random variable, use this command to model a set of probabilities and outcomes in a Monte Carlo simulation, and learn how to find the standard deviation of a set of probabilities and outcomes with the =STDEVPR command.
Video Steps
1. Discrete Random Variables: Type in the set of outcomes and corresponding probabilities in cells A2:B6
2. Enter =SUM(B2:B6) into cell B7
3. Enter =DISCRINV(RAND(),A2:A6,B2:B6) into cell B9 and label “Profit”
4. Enter =B9 into cell B14
5. Select cells A14:B213
6. Click Tools > SimTools > Simulation Table
7. Enter =AVERAGE(B14:B213) into cell B11 and label “Mean”
8. Enter =STDEV(B14:B213) into cell B12 and label “StDev”
9. Enter =STDEVPR(A2:A6,B2:B6) into cell C12
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