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Using the PERCENTILE function


Excel's PERCENTILE() function is useful in many Monte Carlo models, and is particularly useful in answering the main questions behind our Commute Time simulation.  Remember, the questions were:

1.  How much time do I need to allow in order to have 75% confidence that I will arrive on time?
2.  How much time should I allow in order to have 99.5% confidence that I will arrive on time (on days that start with an important meeting)?

As illustrated below, the simple equation

=PERCENTILE(F10:F10009, 0.75)

yields the answer to the first question.  Substituting .995 in place of 0.75 as the second argument in the function answers the second question.

Thus we know we can arrive on time about 75% of the time by allowing 8.1 minutes for our commute, but we should allow a full 36.4 minutes in order to have a 99.5% chance of arriving on time.

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