In cost estimation, the total cost of a project is the sum of component task costs. Each
Question:
In cost estimation, the total cost of a project is the sum of component task costs. Each of these costs is a random variable with a probability distribution. It is customary to obtain information about the total cost distribution by adding together characteristics of the individual component cost distributions—this is called the “roll-up” procedure. For example, E(X1 . . . Xn) E(X1) . . . E(Xn), so the roll-up procedure is valid for mean cost. Suppose that there are two component tasks and that X1 and X2 are independent, normally distributed random variables. Is the roll-up procedure valid for the 75th percentile? That is, is the 75th percentile of the distribution of X1 X2 the same as the sum of the 75th percentiles of the two individual distributions? If not, what is the relationship between the percentile of the sum and the sum of percentiles? For what percentiles is the roll-up procedure valid in this case?
Step by Step Answer:
Probability And Statistics For Engineering And The Sciences
ISBN: 9781111802325
7th Edition
Authors: Dave Ellis, Jay L Devore