Fitting a Distribution for Step 5

When you first open Loan Process.xls, no assumption has been defined for Step 5, Loan Closing. The description in Measure Phase states that it takes an average of two days (16 hours) to close loans but the distribution is not known.

  To create an assumption for Step 5 and fit a distribution to it:

  1. Select cell C22.

  2. Choose Define, then Define Assumption to display the Distribution Gallery dialog for that cell. Define Assumptions button

  3. Click the Fit button.

    The Fit Distribution dialog opens.

  4. Type the range A2:A101 or click the cell selector for the Range edit box. Then, click the Data tab of the workbook and select cells A2 through A101. Cell Selector button

    When you accept the selection, the Fit Distribution dialog opens with the range entered.

  5. Leave the other default settings as shown and click OK.

    The Comparison Chart dialog opens (Figure 163, Comparison Chart Dialog, Cell C22. The normal distribution appears to be the best fit.

    Figure 163. Comparison Chart Dialog, Cell C22

    Comparison Chart Dialog showing Cell C22

  6. Click Accept to accept the normal distribution.

    The Define Assumption dialog opens.

    Figure 164, Define Assumption Dialog, Step 5, Cell C22 shows that the new assumption for Step 5 is a normal distribution with a mean of 16 and a standard deviation of 4.

    Figure 164. Define Assumption Dialog, Step 5, Cell C22

    Define Assumption dialog showing Step 5, Cell C22

  7. Rename the assumption to "Loan Closing" and click OK.

Now, all assumptions for the Loan Process model are complete.