Statistics Theory

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Statistics Theory

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[ Bangladesh Institute of

Management ]

Statistics Theory

[One Important Key To Success Is Self-Confidence. An Important Key To Self-Confidence Is Preparation]

Ans: The word Statistics seems to have been derived from the Latin word Status or the Italian word

Statistia which mean a political State. The term Statistics can be used in two senses (i) plural form

and (ii) singular form.

Singular Form (Statistical Data): Statistics may be defined as the science of collection, organization,

presentation, analysis and interpretation of numerical data.

Plural Form (Statistical Methods): In the plural form, the word implies a collection of numerical figures

which are referred to as data.

Qus: Subdivisions within Statistics (2013-2.a)

Ans: Statisticians commonly separate statistics into two broad categories- (i) Descriptive Statistics and

(ii) Inferential Statistics.

Descriptive statistics: Descriptive statistics involves methods of organizing, picturing and summarizing

information from data.

Inferential statistics: Inferential statistics involves methods of using information from a sample to draw

conclusions about the population.

Qus: Characteristics of Statistics

1) Statistics are aggregate of facts.

2) Statistics are affected to a marked extent by multiplicity of causes.

3) Statistics are numerically expressed.

4) Statistics are enumerated or estimated according to reasonable standards of accuracy.

5) Statistics are collected in a systematic manner.

6) Statistics are collected for a predetermined purpose.

7) Statistics should be placed in relation to each other.

Qus: Statistical Methods (2013-1.a)

Ans: The large volume of numerical information gives rise to the need for systematic methods which can

be used to organize, present, analyze and interpret the information effectively. The following statistical

methods may be followed for statistical investigation.

1) Collection of Data: Collection of data constitutes the 1st step in a statistical investigation. Secondary

data may be obtained from journals, reports, publications, trade and professional bodies etc.

Collection of primary data is one of the most difficult and important task faced by investigator. By

questioning & observation methods primary data can be collected.

2) Organization: Collected data needs to be organized. The 1st step in organizing data is editing. Editing

is done very carefully so that omissions, in consistencies, irrelevant answers and wrong computations

may be corrected and adjusted. After the data have been edited the next step is to classify them. The

last step in organization is tabulation. The object of tabulation s to arrange the data in columns and

rows so that there is absolute clarity in the data presented.

3) Presentation: After data have been collected and organized they are ready for presentation. Data

presented in an orderly manner facilitates statistical analysis.

Md. Ali Reza

4) Analysis: Presented data are analyzed in this step. Methods used in analyzing the presented data are

numerous ranging from simple observation to highly mathematical techniques.

5) Interpretations: The last stage in statistical method is interpretation i.e. drawing conclusions from

the data collected & analyzed. The interpretation of data is a difficult task and requires a high degree

of skills and experience

Qus: What do you mean by data? (2014-1.a; 2011-1.b)

Data are considered as the raw materials of statistics.

Data are numerical measurement that are collected in scientific/ systematic way and are related to the

predetermined objectives.

Statistical observations are called data.

Qus: Data collection Techniques and Tools (2014-1.a; 2011-1.b)

Data collection Techniques

Data Collection Tools

1. Using available information

1. Checklist, data, compilation form

2. Observing

2. Eyes and ears, pen and paper, watch, tape or video

3. Interviewing

or recorder etc.

4. Administering written questionnaires

3. Interview schedule, checklist, questionnaire,

5. Organizing Focus Group Discussions

4. Tape recorder

5. Questionnaire

6. Discussion guide, tape recorder

Qus: Types of Data and Data Sources

Ans: In statistics, data are classified into two broad categories: quantitative data and qualitative data.

A. Quantitative data are those that can be quantified in definite units of measurement. Depending on

the nature of the variable observed for measurement, quantitative data can be further categorized as

continuous and discrete data.

1. Continuous data represent the numerical values of a continuous variable. A continuous variable

is the one that can assume any value between any two points on a line segment, thus representing

an interval of values. All characteristics such as weight, length, height, thickness, velocity,

temperature, tensile strength, etc., represent continuous variables.

2. Discrete data are the values assumed by a discrete variable. A discrete variable is the one whose

outcomes are measured in fixed numbers. The number of customers visiting a departmental store

every day, the incoming flights at an airport, and the defective items in a consignment received

for sale, are all examples of discrete data.

B. Qualitative data refer to qualitative characteristics of a subject or an object. A characteristic is

qualitative in nature when its observations are defined and noted in terms of the presence or absence

of a certain attribute in discrete numbers. These data are further classified as nominal and rank data.

1. Nominal data are the outcome of classification into two or more categories of items or units

comprising a sample or a population according to some quality characteristic. Classification of

students according to sex (as males and females), of workers according to skill (as skilled, semiskilled, and unskilled), and of employees according to the level of education (as matriculates,

undergraduates, and post-graduates), all result into nominal data. Given any such basis of

Md. Ali Reza

classification, it is always possible to assign each item to a particular class and make a summation

of items belonging to each class. The count data so obtained are called nominal data.

2. Rank data, on the other hand, are the result of assigning ranks to specify order in terms of the

integers 1, 2, 3... n. Ranks may be assigned according to the level of performance in a test. a

contest, a competition, an interview, or a show. The candidates appearing in an interview, for

example, may be assigned ranks in integers ranging from I to n, depending on their performance

in the interview. Ranks so assigned can be viewed as the continuous values of a variable

involving performance as the quality characteristic.

Data sources could be seen as of three types:

A. Secondary data: They already exist in some form: published or unpublished - in an identifiable

secondary source. They are, generally, available from published source(s), though not necessarily in

the form actually required.

B. Primary data: Those data which do not already exist in any form, and thus have to be collected for

the first time from the primary source(s). By their very nature, these data require fresh and first-time

collection covering the whole population or a sample drawn from it.

C. Internal Data: Internal data refer to the measurements that are the by-product of routine business

record keeping like accounting, finance, production, personnel, quality control, sales, R&D. Internal

data emerges in the process from payroll, sales amount from a sales journal & the units of finished

products produced from production records, cash receipts from cash records.

Types of Data classification based on basis:

A. Geographical area wise, Cities, districts etc

B. Chronological on basis of time

C. Qualitative according to some attributes

D. Quantitative in terms of some measurable quantity (magnitude)

Ans: The following are some of the fields, where statistics are significant for smooth and efficient

functioning.

1) Statistics & the State: The Government in most countries is the biggest collector and user of

statistical data. All ministries & departments of the Govt. depend heavily on factual data for framing

suitable policies and efficient functioning.

2) Statistics in Business & Management: Application of statistics pervade virtually every area of

activity in business & industry such as production, finance, distribution, market research, research &

development, HRM & accounting.

3) Statistics & Economics: Economics is concerned with the generation and distribution of wealth as

well as with the complex institutional set up connected with the consumption, saving & investment

income.

4) Statistics & Physical Sciences: Statistics are increasingly used in physical sciences especially in

astronomy, chemistry, engineering, zoology, meteorology & certain branches of physics.

Md. Ali Reza

5) Statistics & Natural Science: Statistical techniques have proved to be extremely useful in the study

of all natural sciences like biology, medicine, zoology & botany.

6) Statistics & Research: Statistics is indispensable in research work. Most of the advancement in

knowledge has taken place because of experiments conducted with the help of statistical methods. In

fact, there is hardly any research work today that one can find complete without statistical methods.

7) Statistics & Other uses: Besides the above, statistics are useful to various institutions such as

bankers, brokers, insurance companies, auditors, social workers, labour unions, trade associations &

chamber of commerce. Statistics are immensely useful to politicians & supporters.

8) Statistics & Personnel Management:

In personnel management there are frequent use of personnel statistics e.g. sex ratio, stillness

ratio, turnover rate, absenteeism rate, accident rate, I.Q. test etc are used in different branches of

personnel management, statistics are used in job evaluation, job analysis and wage classification,

fixation and changes.

It is also used in merit rating & other personnel evaluation for future man management &

personnel development in manpower planning.

In fact, the applications of statistics are so numerous that statistics today has risen from the science of

statecraft to the science of universal applicability. It is instrumental in enhancing human welfare & is such

a master key that enables to solve the problems of mankind almost in all fields.

Qus: Function of Statistics:

1. Definiteness: Numerical expressions are convincing & therefore, one of the most important

functions of statistics is to present general statements in a precise & definite form.

2. Condensation: Not only does statistics present facts in a definite form but it also helps in

condensing mass of data into a few significant figures.

3. Comparison: Unless figures are compared with others of the same kind they are often said to carry

any meaning. The statement that there has been an increase of per capita income from US$ 250 in

1985 to US$ 450 in 2005 definitely indicates the increasing trend in per capita income.

4. Prediction: Plans and policies of organizations are invariably formulated well in advance of the time

of their implementation. Knowledge of the future trends is very helpful in framing suitable policies

and plans. Statistical methods provide helpful means of forecasting future trends.

5. Formulating & testing Hypothesis: Statistical methods are extremely useful in formulating &

testing hypothesis & to develop new theories. For example hypothesis like whether students have

benefited from the extra coaching etc can be tested by appropriate statistical tools.

6. Formulation of policies: Statistics provide the basic material for framing suitable policies. For

example, it may be necessary to decide how much oil a nation should import in the next year.

Qus: Statistics in Business and Management

1) Marketing: Statistical analysis are frequently used in providing information for making decision in

the field of marketing it is necessary first to find out what can be sold and the to evolve suitable

strategy, so that the goods which to the ultimate consumer. A skill full analysis of data on production

purchasing power, man power, habits of compotators, habits of consumer, transportation cost should

be consider to take any attempt to establish a new market.

Md. Ali Reza

2) Production: In the field of production statistical data and method play a very important role. The

decision about what to produce? How to produce? When to produce? For whom to produce is based

largely on statistical analysis.

3) Finance: The financial organization discharging their finance function effectively depend very

heavily on statistical analysis of peat and tigers.

4) Banking: Banking institute have found if increasingly to establish research department within their

organization for the purpose of gathering and analysis information, not only regarding their own

business but also regarding general economic situation and every segment of business in which they

may have interest.

5) Investment: Statistics greatly assists investors in making clear and valued judgment in his investment

decision in selecting securities which are safe and have the best prospects of yielding a good income.

6) Purchase: The purchase department in discharging their function makes use of statistical data to

frame suitable purchase policies such as what to buy? What quantity to buy? What time to buy?

Where to buy? Whom to buy?

7) Accounting: Statistical data are also employer in accounting particularly in auditing function, the

technique of sampling and destination is frequently used.

8) Control: The management control process combines statistical and accounting method in making the

overall budget for the coming year including sales, materials, labour and other costs and net profits

and capital requirement.

Qus: Statistics and HRM (2012-1.a)

Ans: Now we will see why statistics is included in HRM.

1) Recruitment and placement: HR manager has to deal with job analysis, HR planning, recruitment,

employee testing, selection, and interviewing. For job analysis, information's are collected from job

related people through questionnaires and interview. For HR planning and recruiting new employees,

trend analysis is required to know the firms past employees and future estimated demand of staff. In

testing and selections, we can see relationship between test scores and job performance for a group

of people.

2) Training and Development: In this section, employees performance is measured and analyzed

through job related performance data such as productivity, absenteeism, grievance, waste, product

quality, and customer complain. All these are done with the help of statistical tools and technique.

3) Compensation: In this section, HR Manager has to collect data from competitive firms of the same

industry regarding compensation package and employee benefit. Here standard of living and price

index are analyzed by using statistical tools.

Finally we can conclude that statistics is inevitable in the field of HRM for employee relations, demand

forecasting, training needs assessment, salary survey, performance measurement, employee satisfaction

survey and training feedback. So we cannot imagine HRM without the help of statistical tools and

techniques.

Ans: The following are the important limitations of the science of statistics

1) Statistics does not deal with isolated measurement.

2) Statistics deals only with quantitative characteristics

3) Statistical results are true only on an average.

4) Statistics is only a means.

5) Statistics can be misused.

Qus: Define Mean, Median, and Mode With Examples. Advantage and Disadvantages (2014-2.a; 2012-3; 2011-4.a)

Mean:

The sum of a set of data divided by the number of data. (Note :- the observations have to be

quantitative and not qualitative))

Median: The middle value or the mean of the middle two values, when the data is arranged in

numerical order. Think of a "median" being in the middle of a highway.

Mode:

The value (number) that appears the most. It is possible to have more than one mode, and it is

possible to have no mode. If there is no mode-write "no mode", do not write zero (0).

Average

Mean

Data

Mean

Mode

Median

12.2

14

13

Advantages

Disadvantages

1. All the data is used to find the answer

1. Very large or very small numbers can

2. It is unique - there is only one answer.

distort the answer

3. Useful when comparing sets of data.

2. Affected by extreme values (outliers)

1.

affect it

Median

2. It is unique - there is only one answer.

2.

3. Useful when comparing sets of data.

1.

Mode or modal 1. The only average we can use when the 2.

class

data is not numerical

3.

large set of data

Not as popular as mean.

There may be more than one mode

There may be no mode at all if none of

the data is the same

It may not accurately represent the data

Qus: How does Mode help HR manager to measure the employee satisfaction of his/her

organization? (2013-3.a)

Ans: Mode contains the highest frequency in any data. Its applications are as follows:1. It is used to influx of the public transport.

2. The no. of games succeeded by any team of players.

3. The frequency of the need of infants.

4. Used to find the number of the mode is also seen in calculation of the wages, in the patients going to

the hospitals, the mode of travel etc.

Md. Ali Reza

Population

sample

The population in statistics includes all A part of the population is called a sample. It is a

members of a defined group that we are studying proportion of the population, a slice of it, a part of

or collecting information on for data driven it and all its characteristics.

decisions.

A population (universe) is the collection of things A sample is a portion of the population selected

under consideration

for analysis

A parameter is a summary measure computed to A statistic is a summary measure computed to

describe a characteristic of the population

describe a characteristic of the sample

Qus: Distinguish Between-Discrete variable and continuous variable (2012-1.b)

Discrete Variable

Continuous Variable

A discrete variable is a variable whose value is A continuous variable is a variable whose value is

obtained by counting.

obtained by measuring.

The value is whole number and not in fractions

The value is in fractions

Discrete variables are countable in a finite amount Continuous Variables would (literally) take

of time.

forever to count.

Examples: number of students present, number of Examples: height of students in class, weight of

red marbles in a jar, number of heads when students in class, time it takes to get to school,

flipping three coins

distance travelled between classes

Qus: Distinguish Between-Primary Data and Secondary Data (2012-1.b)

Primary Data

Secondary Data

Primary data are first hand informations. This Secondary data are the Second hand

informations are collected directly from the informations. The data which have already been

source by means of field studies.

collected and processed by some agency or

persons are termed as secondary data.

Primary data are original and are like raw Secondary data may be abstracted from existing

materials. It is the crudest form of information.

records, published sources or unpublished

sources.

Examples: Data collected by a student for his/her Examples: Census data being used to analyze the

thesis or research project.

impact of education on career choice and earning.

Some Advantages of using Primary data:

Some Advantages of using Secondary data:

1. The investigator collects data specific to the 1. The datas already there- no hassles of data

problem under study.

collection

2. There is no doubt about the quality of the data 2. It is less expensive

collected (for the investigator).

3. The investigator is not personally responsible

3. If required, it may be possible to obtain

for the quality of data (I didnt do it)

additional data during the study period.

Class: Each category of the frequency distribution.

Frequency: The number of data values falling within each class.

Class Limits: The boundaries for each class. These determine which data values are assigned to that

class.

Class Interval: The width of each class. This is the difference between the lower limit of the class and

the lower limit of the next higher class. When a frequency distribution is to have equally wide classes, the

approximate width of each class is

Class Mark (Midpoint): The midpoint of each class. This is midway between the upper and lower class

limits. It is found by adding the upper and lower limits and dividing by two. It can also be found by

adding the upper and lower boundaries and dividing by two.

Qus: Why should we calculate standard deviation? (2014-4.a; 2011-4.b)

Ans: Standard Deviation (SD) is the measure of spread of the numbers in a set of data from its mean

value. Also called as SD, Standard Deviations symbol (sigma). This can also be said as a measure of

variability or volatility in the given set of data.

The standard deviation is a value used frequently in the social sciences and statistics, especially when

discussing data printed in research papers or journals. The standard deviation can be useful in determining

how to continue research or a course of action depending on how much variance exists in the data. For

example, a teacher who finds there is a large value for the standard deviation of test scores, indicating

there is great variance, may choose to adjust his teaching method to accommodate students of various

backgrounds and aptitudes. When test scores indicate there is little variance, represented by a small

standard deviation, and when they're consistently high, there may be little concern over how to instruct

the class or make up the lesson plans. There are two types of standard deviations: population standard

deviation and sample deviation.

Qus: What is Index Number? (2012-7)

Ans: Index numbers are statistical measures designed to show changes in a variable or group of related

variables with respect to time, geographic location or other characteristics such as income, profession, etc.

A collection of index numbers for different years, locations, etc., is sometimes called an index series.

1. Simple Index Number: A simple index number is a number that measures a relative change in a

single variable with respect to a base.

2. Composite Index Number: A composite index number is a number that measures an average relative

changes in a group of relative variables with respect to a base.

3. Price index Numbers: Price index numbers measure the relative changes in prices of a commodities

between two periods. Prices can be either retail or wholesale.

4. Quantity Index Numbers: These index numbers are considered to measure changes in the physical

quantity of goods produced, consumed or sold of an item or a group of items.

Qus: What do you mean by cost of living index? Describe the main problems for the construction of

index number (2014-6.a; 2013-6.a)

Ans: An inflationary indicator that measures the change in the cost of a fixed basket of products and

services, including housing, electricity, food, and transportation. The cost-of-living index is published

monthly. Also called cost-of-living index/Consumer Price Index (CPI)

Problems in the Construction of Index Numbers

1. The purpose of the index

2. Selection of a base period

a) The base period should be normal one

b) The base period should not be too distant in the past

c) Fixed base or chain base

3. Selection of number of items

4. Selection of source of data

5. Collection of data

6. Price quotations

7. Choice of an Average

8. Selection of appropriate weights

9. Selection of an appropriate formula

10. International Comparisons not Possible

Qus: Define probability of an event (2014-7.a)

Ans: An Event is a one or more outcome of an experiment. Example of Event-When a number cube is

rolled, 1, 2, 3, 4, 5, or 6 is a possible event. When you roll a number cube and toss a coin at the same

time, a possible event is a 3 and a tail respectively.

Probability Of An Event

The Number Of Ways Event A Can Occur

P(A) =

The total number Of Possible Outcomes

Qus: What is Regression Analysis? (2012-6)

Ans: In statistics, regression analysis is a statistical process for estimating the relationships among

variables. Statistical approach to forecasting change in a dependent variable (sales revenue, for example)

on the basis of change in one or more independent variables (population and income, for example). The

general form of each type of regression is:

Linear Regression: Y = a + bX + u

Multiple Regression: Y = a + b1X1 + b2X2 + B3X3 + ... + BtXt + u

Where:

Y= the variable that we are trying to predict

X= the variable that we are using to predict Y

a= the intercept

b= the slope

u= the regression residual.

Md. Ali Reza

Ans: A measurement of the spread between numbers in a data set. The variance measures how far each

number in the set is from the mean. Variance is calculated by taking the differences between each number

in the set and the mean, squaring the differences (to make them positive) and dividing the sum of the

squares by the number of values in the set.

Ans: In probability theory and statistics, the coefficient of variation (CV) is a standardized measure of

dispersion of a probability distribution or frequency distribution. It is defined as the ratio of the standard

deviation to the mean . It is also known as unitized risk or the variation coefficient. The absolute

value of the CV is sometimes known as relative standard deviation (RSD), which is expressed as a

percentage.

Coefficient of variation is used to know the consistency of the data. By consistency we mean the

uniformity in the values of the data/distribution from arithmetic mean of the data/distribution. A

distribution with smaller than the other is taken as more consistent than the other.

Is also very useful when comparing two or more sets of data that are measured in different units of

measurement.

Qus: Define Correlation and Co-Efficient Of Determination (2013-4.a; 2012-5)

Correlation: Degree and type of relationship between any two or more quantities (variables) in which

they vary together over a period; for example, variation in the level of expenditure or savings with

variation in the level of income. A positive correlation exists where the high values of one variable are

associated with the high values of the other variable(s). A 'negative correlation' means association of high

values of one with the low values of the other(s). Correlation can vary from +1 to -1. Values close to +1

indicate a high-degree of positive correlation, and values close to -1 indicate a high degree of negative

correlation. Values close to zero indicate poor correlation of either kind, and 0 indicates no correlation at

all. While correlation is useful in discovering possible connections between variables, it does not prove or

disprove any cause-and-effect (causal) relationships between them. See also regression.

Coefficient of Determination: A statistical method that explains how much of the variability of a factor

can be caused or explained by its relationship to another factor.

Coefficient of determination is used in trend analysis. It is computed as a value between 0 (0 percent) and

1 (100 percent). The higher the value, the better the fit. Coefficient of determination is symbolized by r2

because it is square of the coefficient of correlation symbolized by r. The coefficient of determination is

an important tool in determining the degree of linear-correlation of variables ('goodness of fit') in

regression analysis. Also called r-square. The coefficient of determination (denoted by R2) is a key

output of regression analysis.

Ans: Correlations-are used to understand how data sets are related. In other words, if variable A changes

does variable Y change? There are about a million ways this can be used in HR alone. If engagement goes

up, does turnover go down? (Negative correlation). But in a broader sense, HR can analyze the

relationship between employee behaviours and customer behaviours. If employees are knowledgeable

regarding our products, do sales go up? Correlations can be calculated very simply in Excel or SPSS.

Qus: Statistics plays an important role in management planning and decision making (2014-1.a;

2013-1.b; 2011-1.a)

Ans: Modern management is impossible without the assistance of statistics. Planning and Decision

making is major portion of management activity. Managers and executives are under the obligation of

making decisions & statistics make relevant figures talk to them during their decision making. Managers

are rated on their ability to make and implement correct decision because the probability of a firm is

dependent upon the cumulative results of many previous decisions. And most of the tomes it is done by

the statistical techniques.

Statistics provide a birds eye view as it were, of the situation and without them it would be practically

impossible to estimate correct results.

Qus: Types of Samples in Statistics [2015-7.b]

Ans: There are two branches in statistics, descriptive and inferential statistics. Of these two main

branches, statistical sampling concerns itself primarily with inferential statistics. This involves

determining values of population parameters on the basis of a statistical sample. There are a variety of

different types of samples in statistics. Each of these samples is named based upon how its members are

obtained from the population. Below is a list with brief description of some of the most common

statistical samples.

1. Random sample Here every member of the population is equally likely to be a member of the

sample.

2. Simple Random Sample Not only is this a random sample, but every group of n is equally likely to

be the sample.

3. Voluntary Response Sample Here subjects from the population determine whether they will be

members of the sample or not.

4. Convenience Sample - This type of sample is characterized by the selection of easy to obtain

members from the population.

5. Systematic Sample - A systematic sample is chosen on the basis of an ordered system.

6. Cluster Sample A cluster sample involves using a simple random sample of evident groups that the

population contains.

7. Stratified Sample - A stratified sample results when a population is split into at least two nonoverlapping subpopulations.

It is important to know the distinctions between the different types of samples. For example, a simple

random sample and a systematic random sample can be quite different from one another. Some of these

samples are more useful than others in statistics. A convenience sample and voluntary response sample

can be easy to perform, but these types of samples are not randomized to reduce or eliminate bias.

Md. Ali Reza

It is also good to have a working knowledge of all of these kinds of samples. Some situations call for

something other than a simple random sample. We must be prepared to recognize these situations.

Qus:Variable and attribute [2015-7.a]

Ans: In science and research, attribute is a characteristic of an object (person, thing, etc.). Attributes are

closely related to variables. Variable is a logical set of attributes. Variables can "vary" - for example, be

high or low. How high, or how low, is determined by the value of the attribute (and in fact, an attribute

could be just the word "low" or "high"). (For example see: Binary option)

While an attribute is often intuitive, the variable is the operationalized way in which the attribute is

represented for further data processing. In data processing data are often represented by a combination of

items (objects organized in rows), and multiple variables (organized in columns).

Values of each variable statistically "vary" (or are distributed) across the variable's domain. Domain is a

set of all possible values that a variable is allowed to have. The values are ordered in a logical way and

must be defined for each variable. Domains can be bigger or smaller. The smallest possible domains have

those variables that can only have two values, also called binary (or dichotomous) variables. Bigger

domains have non-dichotomous variables and the ones with a higher level of measurement. (See also

domain of discourse.)

BBA, MBA, MDS, PGD-HRM

Email: reza_bba08@yahoo.com

Cell: 01916-104295 & 01788-275795

One Important Key To Success Is Self-Confidence. An Important Key to Self-Confidence Is Preparation

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