Gamma Example 1

A computer dealership knows that the lead time for re-ordering their most popular computer system is 4 weeks. Based upon an average demand of 1 unit per day, the dealership wants to model the number of business days it will take to sell 20 systems.

The shape parameter is used to specify the r th occurrence of the event. In this example, you would enter 20 for the shape parameter (5 units per week times 4 weeks). The result is a distribution showing the probability that x number of business days will pass until the 20th system is sold (Figure 84, Gamma Distribution).

Figure 84. Gamma Distribution

This figure displays a gamma distribution.