Capital Budgeting in the Chemical Industry

 

Background Modules for ChE473K
Process Design and Operations

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University of Texas at Austin

Gerald G. McGlamery, Jr., Ph.D., P.E.

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The Normal Distribution

The Normal distribution (ND) is the most common and useful of the continuous distribution functions. It occurs often in nature because of the central limit theorem. The ND is a two-parameter distribution characterized by its mean, µ, and its standard deviation, s.

The Standardized Normal distribution is an ND with µ = 0 and s = 1. The continuous random variable is scaled as

The Standardized Normal PDF is shown here:

 

The Standardized Normal CDF is shown here:

In stochastic modeling, the normal distribution is best used to model variables whose bounds are distant from the range of interest.

 

Updated: Sunday, March 7, 2010

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