What is CDF - Cumulative distribution function?

Question

Could someone please explain in layman's terms what CDF is? If someone could show a real-life example where this could be useful, it would be great.

Answer 1

Hello,

The cumulative distribution function is the probability a Random Variable X will take on a value less than or equal to x. Here, random variable is a an outcome to a random process.

This is is actually used quite a bit where I work in the area of cost estimating. For budgeting purposes, you may want to assess the probability that a system will be less than or equal to some number, as costing out a system can depend on many things. So, we can’t be exactly correct in assessing the cost, so we need to determine it’s distribution with an understanding there is some error involved.

Hope this helps!