The Chi-Square Goodness-of-Fit Test

The chi-square goodness-of-fit test is used to analyze probabilities of multinomial distribution trials along a single dimension. For example, if the variable being studied is economic class with three possible outcomes of lower income class, middle income class, and upper income class, the single dimension is economic class and the three possible outcomes are the three classes. On each trial, one and only one of the outcomes can occur. In other words, a family unit must be classified either as lower income class, middle income class, or upper income class and cannot be in more than one class. The chi-square goodness-of-fit test compares the theoretical, frequencies of categories from a population distribution to the observed, or actual, frequencies from a…

Customer Lifetime Value – A Case Study

A Your manager asks you what you think might explain the differences in p, r, and AC between the three groups. What would you say? i Group 1’s higher “p” could be due to the fact that this group of students doesn’t have the meal plan that undergrad students who live on (or close to) campus have. Additionally, some MBA students may have longer classes than the typical undergad student, especially on weekends. The MBA students may be more inclined to buy more food to save and snack on during class sessions. The retention probability through a certain time “r” is expected to be higher for undergrad students who live on or closer to campus and can easily walk to…

Decision tree analysis

Decision tree analysis known as an analytical tool applied to decision-making under condition of uncertainty, also clarifying where there are many possible outcomes for various alternatives and some outcomes are dependent on previous outcomes. However, decision tree will present as a diagram by showing the relationship among possible courses of action, possible events and the potential outcomes for each course of action in the decision (Drury, 2012). So decision tree analysis is useful for merchant navy company to understand in what direction their chance events are and what their values in terms of profits and losses are for each of the two tooling alternatives, also visualize the outcomes of different prospects in order make better decision under uncertainty Strengths of…