Percentile of the sum and the sum of percentiles

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Reference no: EM13966450

In cost estimation, the total cost of a project is the sum of component task costs. Each of these costs is a random variable with a probability distribution. It is customary to obtain information about the total cost distribution by adding together characteristics of the individual component cost distributions this is called the roll-up procedure. For example, E(X1 + ... + Xn) = E(X1) + ... + E(Xn), so the roll- up procedure is valid for mean cost. Suppose that there are two component tasks and that X1 and X2 are independent, normally distributed random vari- ables. Is the roll-up procedure valid for the 75th per- centile? That is, is the 75th percentile of the distri- bution of X1 + X2 the same as the sum of the 75th percentiles of the two individual distributions? If not, what is the relationship between the percentile of the sum and the sum of percentiles? For what per- centiles is the roll-up procedure valid in this case?

Reference no: EM13966450

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