11-1

Chapter Eleven

12-1

Analysis of Variance

GOALS
When you have completed this chapter, you will be able to:

ONE
Discuss the general idea of analysis of variance.
TWO
List the characteristics of the F distribution.
THREE
Conduct a test of hypothesis to determine whether the variances of two
populations are equal.

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11-2

Chapter Eleven

12-2

continued

Analysis of Variance
GOALS
When you have completed this chapter, you will be able to:

FOUR
Organize data into a one-way ANOVA table.

FIVE
Conduct a test of hypothesis among three or more treatment means.
SIX
Develop confidence intervals for the difference between treatment means.

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11-3
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Characteristics of F-Distribution
1. There is a family of F Distributions.
Each member of the family is
determined by two parameters: the
numerator degrees of freedom and the
denominator degrees of freedom.

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11-4
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Characteristics of F-Distribution

continued

2. The F distribution is continuous.

3. The F distribution cannot be negative.

4. It is positively skewed.
5. It is asymptotic.
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11-5
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Test for Equal Variances

For the two tail test, the test statistic
is given by:
2
F

s1

2
s2

and s 22 are the sample

variances for the two samples.
2
1s

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11-6
12-6

Test for Equal Variances

The null hypothesis is rejected if the
computed value of the test statistic is
greater than the critical value.

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11-7
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EXAMPLE 1
Colin, a stockbroker at Critical Securities, reported that
the mean rate of return on a sample of 10 internet
stocks was 12.6 percent with a standard deviation of
3.9 percent. The mean rate of return on a sample of
8 utility stocks was 10.9 percent with a standard
deviation of 3.5 percent. At the .05 significance
level, can Colin conclude that there is more variation
in the software stocks?

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11-8
12-8

EXAMPLE 1

continued

Step 1: The hypotheses are:

H 0 : I2 U2
H1 : I2 U2

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11-9
12-9

EXAMPLE 1

continued

The significance level is .05.

The test statistic is the F distribution.

H0 is rejected if F>3.68. The degrees of

freedom are 9 in the numerator and 7 in the
denominator.

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11-10
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Example 1

continued

The value of F is computed as follows.

F

(3.9) 2
(3.5)

1.2416

H0 is not rejected. There is insufficient evidence

to show more variation in the internet stocks.

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11-11
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Underlying Assumptions for ANOVA

The F distribution is also used for testing
whether two or more sample means
came from the same or equal
populations.

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11-12
12-12

Underlying Assumptions for ANOVA

ANOVA requires the following conditions:
The

samples are randomly selected and are

independent.
The populations have equal standard deviations.
The sampled populations follow the normal
distribution.

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11-13
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Analysis of Variance Procedure

The Null Hypothesis is that the population means
are the same.
The Alternative Hypothesis is that at least one of
the means is different.
The Test Statistic is the F distribution.
The Decision rule is to reject the null hypothesis
if F (computed) is greater than F (table) with
numerator and denominator degrees of freedom.
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Analysis of Variance
Procedure

11-14
12-14

If there are k populations being sampled, the

numerator degrees of freedom is k 1.
If there are a total of n observations the
denominator degrees of freedom is n k.
The test statistic is computed by:
SST k 1
F
SSE n k
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11-15
12-15

Analysis of Variance Procedure

SS Total is the total sum of squares.
2
(

X
)
2
SS total X
n

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12-16

Analysis of Variance Procedure

SST is the treatment sum of squares.
Tc2
SST
n
c

X 2

TC is the column total, nc is the number of

observations in each column, X the sum
of all the observations, and n the total
number of observations.
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11-17
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Analysis of Variance Procedure

SSE is the sum of squares error.

SSE SS total - SST

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11-18
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EXAMPLE 2
Rosenbaum Restaurants specialize in meals for
senior citizens. Katy Polsby, President, recently
developed a new meat loaf dinner. Before
making it a part of the regular menu she decides
to test it in several of her restaurants. She would
like to know if there is a difference in the mean
number of dinners sold per day at the Anyor,
Loris, and Lander restaurants. Use the .05
significance level.

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11-19
12-19

Example 2
Aynor
13
12
14
12

Tc
nc

51
4

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Loris
10
12
13
11

46
4

continued

Lander
18
16
17
17
17
85
5

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11-20
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Example 2 continued
The SS total is:
2
2
(

X
)

182
SS total X 2
2634
86
n
13

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11-21
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Example 2 continued
The SST is:
Tc2
SST
nc

X 2

512 46 2 852

4
4
5

76.25

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13

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11-22
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Example 2 continued
The SSE is:
SSE = SS total SST
= 86 76.25 = 9.75

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11-23
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EXAMPLE 2

continued

Step 1: H0: 1 = 2 = 3
H1: Treatment means are not the same
Step 2: H0 is rejected if F>4.10. There are 2 df in
the numerator and 10 df in the denominator.

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11-24
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Example 2 continued
To find the value of F:
SST k 1
F
SSE n k

76 3 1

39.10
9.75 13 3

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11-25
12-25

Example 2

continued

The decision is to reject the null hypothesis. The

treatment means are not the same. The mean
number of meals sold at the three locations is not
the same.
The ANOVA table on the next slide is from the
Minitab system.

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11-26
12-26

Example 2
Analysis of Variance
Source
DF
SS
Factor
2
76.250
Error
10
9.750
Total
12
86.000

Level
Aynor
Loris
Lander

N
4
4
5

Pooled StDev =

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Mean
12.750
11.500
17.000
0.987

MS
38.125
0.975

StDev
0.957
1.291
0.707

continued

F
39.10

P
0.000

Individual 95% CIs For Mean

Based on Pooled StDev
---------+---------+---------+------(---*---)
(---*---)
(---*---)
---------+---------+---------+------12.5
15.0
17.5

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11-27
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Inferences About Treatment Means

When we reject the null hypothesis that the
means are equal, we may want to know
which treatment means differ.
One of the simplest procedures is through
the use of confidence intervals.

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11-28
12-28

Confidence Interval for the

Difference Between Two Means
1 1
X1 X 2 t MSE n n
1
2

where t is obtained from the t table with

degrees of freedom (n - k) and MSE =
[SSE/(n - k)]
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11-29
12-29

EXAMPLE 3
From EXAMPLE 2 develop a 95%
confidence interval for the difference in the
mean number of meat loaf dinners sold in
Lander and Aynor. Can Katy conclude
that there is a difference between the two
restaurants?

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11-30
12-30

EXAMPLE 3
1 1
(17 12.75) 2.228 .975
4 5
4.25 1.48 (2.77,5.73)

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11-31
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Example 3 continued
Because zero is not in the interval, we
conclude that this pair of means
differs. The mean number of meals
sold in Aynor is different from Lander.

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