Showing probability ranges

See also: Presenting results introduction, Graphical descriptions of model outputs, Histogram (density) plots, Plotting a variable with discrete and continuous elements

Simulation software offers the facility to divide a histogram plot into up to three areas by using delimiters.

In this example, the user has defined the lower limit as the 5% mark, and the upper limit as the 95% mark. This approach is useful if your organization consistently requires only two percentiles in a risk analysis model, and one could then dispense with showing a cumulative plot as well.

One could instead illustrate some target value(s) on the plot using delimiters:

Let's say in this example, the distribution is the estimated cost of a project in $10^5. Perhaps one has a budget of $2,350,000 and a reserve of an extra $500,000. The histogram shows that you have approximately an 85% probability of being under budget, and about a 99% probability that your budget + contingency would cover the total project cost.

Read on: Plotting a variable with discrete and continuous elements

 

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