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Discretization, Simulation and Swanson’s (Inaccurate) Mean 

Presented by: Eric Bickel, SDP Fellow 
(SDP Webinar - Invited Talk)

Swanson's Mean (SM) is heavily used within the oil and gas industry to approximate continuous probability distributions such as the log-normal. In this talk, we document the errors induced by this practice, which, as we show, has no theoretical justification for any distribution other than the normal. In parallel, we review methods to discretize continuous distributions and compare these methods to Monte Carlo simulation. We demonstrate that the best discretization methods have an accuracy equivalent to that of tens of thousands of Monte Carlo trials.

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Keywords: evaluation anamod, modeling modtree, uncertainty analysis uncanal, discretization discz, Swansom Megill, Monte Carlo simulation mcsim, distributions