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Use the Monte Carlo approximation to estimate the mean gamma distribution in Excel
The gamma distribution is a continuous probability distribution that models right skewed data. This distribution has been used to model cancer rates, insurance claims, and rainfall. It is similar to the exponential distribution and it can be used to model failure times, wait times, service times, etcetera.
The most frequent use of the gamma distribution is to model the time between independent events that occur at a constant average rate. Using this distribution, analysts can specify the number of events, such as modelling the time until the second and third accident occurs, thereby modelling failure times.
The gamma distribution, being a generalisation of the exponential distribution, can model the elapsed time between various numbers of events. This distribution, however, can only model the time until the next event, such as when the next accident will occur.
The gamma distribution is quite common in various and real world phenomena, particularly in areas involving time based or event based processes.
A few examples where the gamma distribution naturally arises are:-
- The gamma distribution is used in queuing theory. It is used to model the time until the nth event in a Poisson process.
