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The Beta distribution is a continuous probability distribution defined by two positive parameters α and β. It is used to represent the outcomes or random behavior of proportions or percentages. In project management, the three-point technique called "beta distribution" is used to recognize uncertainty in project time estimates. It provides tools to identify high-risk tasks and manage time for project completion. The beta distribution is defined on the interval [0,1] and its notation is Beta(α,β) where α and β are shape parameters controlling the distribution. It has applications in Bayesian analysis, task duration modeling, and project planning tools like CPM and PERT.

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6 views

Beta Distrib

The Beta distribution is a continuous probability distribution defined by two positive parameters α and β. It is used to represent the outcomes or random behavior of proportions or percentages. In project management, the three-point technique called "beta distribution" is used to recognize uncertainty in project time estimates. It provides tools to identify high-risk tasks and manage time for project completion. The beta distribution is defined on the interval [0,1] and its notation is Beta(α,β) where α and β are shape parameters controlling the distribution. It has applications in Bayesian analysis, task duration modeling, and project planning tools like CPM and PERT.

Uploaded by

Yash
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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The Beta distribution is a type of probability distribution which represents all the possible value of

probability. Let us discuss its definition and formula with examples. In probability and statistics, the
Beta distribution is considered as a continuous probability distribution defined by two positive
parameters. It is a type of probability distribution which is used to represent the outcomes or
random behavior of proportions or percentage.

Why are Beta Distributions Used in Project Management?

The three-point technique, which is also called the beta distribution technique, is used to recognize
the uncertainty in the estimated project time. It provides powerful quantitative tools to identify the
tasks which are having the greatest risk. It also manages the time for project completion.

Beta Distribution Definition

The beta distribution is a family of continuous probability distributions set on the interval [0, 1]
having two positive shape parameters, expressed by α and β. These two parameters appear as
exponents of the random variable and manage the shape of the distribution.

Usually, the basic distribution is known as the Beta distribution of its first kind, and prime beta
distribution is called for its second kind.

The most common use of this distribution is to model the uncertainty about the probability of
success of a random experiment. In project management, a three-point technique called “beta
distribution” is used, which recognizes the uncertainty in the estimation of the project time. It
provides powerful quantitative tools coupled with the basic statistics to compute the confidence
levels for the expected completion time.

Also, the beta distribution is used in PERT where it produces a bell-shaped curve which is nearly
normal. Consider an example; the beta distribution is used in the Bayesian Analysis to define the
initial knowledge about the probability of the success that helps to complete the specified mission
successfully. It is a suitable method for the random behavior of the proportions and percentages.

Beta Distribution Notation


It is defined on the interval [0,1] denoted by α and β, usually. α and β are two positive parameters
that appear as exponents of the random variable and is intended to control the shape of the
distribution. Its notation is Beta(α,β), where α and β are the real numbers, and the values are more
than zero.
Beta Distribution Formula
The beta distribution is used to check the behaviour of random variables which are limited to
intervals of finite length in a wide variety of disciplines.

The characterization of this distribution is basically defined as Probability Density Function,


Cumulative Density Function, Moment generating function, Expectations and Variance and its
formulas are given below.
Properties
Some of the properties that satisfy the distribution are as follows:

The measure of central tendency. They are:

1. Mean
2. Median
3. Mode
4. Geometric Mean
5. Harmonic Mean

The measure of statistical dispersion, such as:

6. Variance
7. Geometric variance and covariance
8. Mean absolute difference
9. Mean absolute deviation around the mean

Beta Distribution Applications


It is used in many applications, that includes

• Bayesian hypothesis testing


• The rule of succession
• Task duration modelling
• Project planning control systems like CPM and PERT.
Beta Distribution Example
Problem: Suppose, if in a basket there are balls which are defective with a Beta distribution of

ALPHA=5 and

β
=2 . Compute the probability of defective balls in the basket from 20% to 30%.

Solution: Let us consider the balls are defective with a Beta distribution of

α
=2 and

β
=5. Now to calculate the probability of defective balls from 20% to 30% in the basket we have to
apply the Beta probability density function formula, which is;

P(x) =xa−1(1−x)β−1/B(α,β)

P(0.2≤x≤0.3)=

∑0.20.3x2−1(1−x)5−1/B(2,5)
=0.23518

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