Excel like a finance pro.
Statistical function
NORM.INV
Returns the value for a given probability under a normal distribution.
When to use it
The value at a given cumulative probability for a normal distribution: the reverse of NORM.DIST. This is how you turn a service level into a stock quantity or a percentile into a score.
The shape of it
- Syntax
=NORM.INV(probability, mean, standard_dev)
Worked examples
Critical value
=NORM.INV(0.975,0,1) → 1.959963985
The 97.5th percentile of the standard normal.
Percentile score
=NORM.INV(0.9,100,15) → 119.2232725
The 90th percentile with mean 100 and sd 15.
Random normal
=NORM.INV(RAND(),50,10) → 47.3…
A random draw from a normal distribution, new on every recalculation.
Worth knowing
- Safety stock: NORM.INV(0.95,0,1) × sd of demand over lead time.
- Monte Carlo: fill a column with NORM.INV(RAND(),mean,sd).
- NORM.S.INV is the same with mean 0 and sd 1.
Where it goes wrong
- #NUM! for probability of 0, 1, or outside that range, or for a non-positive sd.
- Probabilities very close to 0 or 1 return huge values.
Related
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