Anova captures variation within the group and among the group as well

FOR 2 variables T test is used

However, for more than 2 variables a comparative test and valuation is used = ANOVA

F test is test stat used for analysis of variation

Training director wanted to determine whether there were any differences in effectiveness of three
different training methods. Therefore, he chooses 16 new employees assigned at random to the
three training methods. After completion of training method, Counting the production output of
these 16 trainees given below

Method 1 Method 2 Method 3

15 22 18

18 27 24

19 18 19

22 21 16

11 17 22

15

F is the t statistics for ANOVA

F = Between column Variance / Within column variance =sigma b2/sigma within group

Number of degrees of freedom in the numerator of the f ratio= Number of Samples-1

Number of degrees of freedom in the denominator of the F ratio = ∑

F test is a single tailed Test

H0

Regression

Regression is a model which studies a relationship and is used for multipurpose and it determines
the relation between one or more variables

How much a particular set of independent variables explain the dependent variable example how
much is income related to purchasing power of customer

Purchase =f(x,y,z)

Regression= Correlation + Anova

ANOVA only determines the variations

Demand Forecasting Model = Regression Equation

Purchase = f(Number of Vehicles , Income , Education , Age)

Purchase = a +b * Vehicle+ c*Income +d*Education+e*Age

Objective is to estimate the values of a.b.c,d and e

Coefficient = Estimators = Parameters = Intercept/Slope = Constant

To estimate the vales of parameters we use OLS Method = Ordinary Least Square Estimation
Methods

Purchase = Pur ^

And Y = Y^

Plotting of graph for purchase and estimated data

Error between the Predicted and Real data has to be minimized so that we have a best fit curve

T is the test statistics of parameter or coefficient

Validity of the model is tested by F Statistics

Standard error measures the variation between the actual and predicted values

H0= b=c=d=e=0

i.e There is no impact of the income , age , education , and number of vehicles on the purchase of
hybrid cars

Ha=

Coefficient of R2

Coefficient of determination is measured the R 2 is used to measure the goodness of fit of regression
equation and it takes value between (0,1) It gives how much purchasing decision is taken by
customer taken all together

If R=0.75 This means the purchasing power of respondent is determined by Number of Vehicle ,
Income , Education , Age

F is the test statistics used to

Hypothesis Is H0= R2=0

Ha : R2>0

Approximate Prediction Intervals

Regression Prediction Method Output

Point Prediction – Only one value can be predicted

Probabilistic Prediction – For data driven Using Value of R square

Interval Prediction – Giving the interval for prediction