The lognormal distribution is continuous. It is widely used in situations where values are positively skewed, for example, for determining stock prices, real estate prices, pay scales, and oil reservoir size.
Location, Mean, Standard Deviation
By default, the lognormal distribution uses the arithmetic mean and standard deviation. For applications where historical data are available, it is more appropriate to use the logarithmic mean and logarithmic standard deviation or the geometric mean and geometric standard deviation. These options are available from the Parameters menu in the menu bar. Notice that the location parameter is always in the arithmetic space.
If you have historical data available with which to define a lognormal distribution, it is important to calculate the mean and standard deviation of the logarithms of the data and then enter these log parameters using the Parameters menu (Location, Log Mean, and Log Standard Deviation). Calculating the mean and standard deviation directly on the raw data will not give you the correct lognormal distribution. Alternatively, use the distribution fitting feature described in Fitting Distributions to Historical Data. |
For more information on these alternate parameters, see the lognormal distribution section in the Oracle Crystal Ball Reference and Examples Guide. For more information about this menu, see Using Alternate Parameter Sets.