Using Simulation to Teach Distributions

Many students doubt that statistical distributions are of practical value. Simulation makes it possible for students to tackle challenging, understandable projects that illustrate how distributions can be used to answer “what-if” questions of the type often posed by analysts. Course materials that have been developed over two years of classroom trials will be shared, including (1) overviews of distributions and simulation; (2) basic capabilities of @RISK software; (3) simulation spreadsheets suitable for analysis by teams; and (4) exercises to guide the teams. These revisable materials could also be used as in-class demonstrations. Concepts illustrated include expected value, k-tiles (e.g., quartiles), empirical distributions, distribution parameters, and the law of large numbers. For those who don't have @Risk, spreadsheets are provided which demonstrate elementary risk-modeling concepts using only Excel. All materials can be downloaded from www.sba.oakland.edu/Faculty/DOANE/downloads.htm. Supplemental data for this article can be accessed on the publisher's website.