If you are drilling for oil and want to describe the number of dry wells you would drill before the next producing well, you would use the geometric distribution. Assume that in the past you have hit oil about 10% of the time.
The first step in selecting a probability distribution is matching the data with a distribution’s conditions. Checking the geometric distribution:
These conditions match those of the geometric distribution.
The geometric distribution has only one parameter: Probability. In this example, the value for this parameter is 0.10, representing the 10% probability of discovering oil. You would enter this value as the parameter of the geometric distribution in Crystal Ball.
The distribution illustrated in Figure 101, Geometric Distribution shows the probability of x number of wells drilled before the next producing well.
