Capterra Glossary
Degrees of Freedom
In data samples, degrees of freedom are the maximum number of logically independent values that have the freedom to vary. The degrees of freedom are calculated by subtracting one from the number of items provided in the data sample. Calculating the degrees of freedom when making business decisions is important since it determines the lack of constraint in a data set. For example, say a business is trying to decide how much output a company wants to produce and the number of employees they need to do so, these are two variables that are intertwined. Freely deciding one, determines the fate of the other.
What Small and Midsize Businesses Need to Know About Degrees of Freedom
Small and midsize businesses often use the degrees of freedom when making critical business decisions. For instance, if an organization wants to host a dinner for their customers, the business must decide how many caterers to hire. In this scenario, the company has two sets of data: the numbers of caterers for hire and the total cost of the caterers. If the company decides they are going to hire three caterers, without paying attention to costs, they will have no control over the amount spent on the caters. However, if the small corporation decides on a specific amount they want to spend, this will limit the number of caterers they can afford to hire and help them stay within budget.
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