Microsoft Excel has different functions that can be used to calculate probability based on the available data. For a standard discrete dataset, a person can use the COUNTIF to determine the values that are equal to X, <X, or <X. After that, the probability can be calculated by simply dividing the number of counts with the total number of trials ( Letkowski, 2012 ). However, other functions are required to calculate the normal distribution, Poisson, and binomial probabilities.
The NORM.DIST function is used to determine the normal distribution probability. First, you must determine the mean and the standard deviation of your dataset using the AVERAGE and STDEV functions. Once these values have been determined, they are used to calculate the normal distribution using the format NORM.DIST(x, mean, standard deviation, FALSE). To get the probability of a particular trial, the sum of preceding probabilities is determined.
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The binomial probability can be calculated using the BINOM.DIST function in Excel. To use the Excel function, one must determine the general probability of the provided data as well as the number of trials. Then, the Excel function can be employed as follows: BINOM.DIST (x, trials, probability, FALSE). The probability that X=x can be read immediately. Probability of <X or >X can be determined by summing the preceding or subsequent probabilities, respectively ( Letkowski, 2012 ).
The final function, POISSON.DIST, can be used to calculate probability when you only have the dataset and its mean. You only need to key in POISSON.DIST(x, mean, FALSE). Excel will calculate the probability for each trial ( Letkowski, 2012 ). To get X=x, you will read the direct probability value directly. However, to get the probability that X> or X<x, you will have to determine the cumulative probability, which is the sum of probability succeeding or preceding X.
The Poisson probability can be used to determine if Intel had discriminately lay off older employees. Using 49 years as the mean age of the employees who were laid off and assuming that employees in Intel are aged between 20 and 60 years, the Poisson distribution shows that about 85% of employees who were laid off are aged 40 and above, which is against the Age Discrimination in Employment Act of 1967.
Reference
Letkowski, J. (2012). Applications of the Poisson probability distribution. In Proc. Acad. Business Res. Inst. Conf (pp. 1-11).
