Statistics For Managers Using Microsoft Excel: 6 Global Edition

Statistics for Managers using
Microsoft Excel
6th Global Edition
Chapter 11
Analysis of Variance
Copyright ©2011 Pearson Education 11-1

Learning Objectives
In this chapter, you learn:
 The basic concepts of experimental design
 How to use one-way analysis of variance to test for differences
among the means of several populations (also referred to as
“groups” in this chapter)
 How to use two-way analysis of variance and interpret the
interaction effect
 How to perform multiple comparisons in a one-way analysis of
variance and a two-way analysis of variance

Chapter Overview
DCOVA
Analysis of Variance (ANOVA)
Randomized
One-Way Block Design Two-Way
ANOVA (On Line Topic) ANOVA
F-test
Tukey Multiple Interaction
Tukey- Comparisons Effects
Kramer
Multiple Tukey Multiple
Comparisons Comparisons
Levene Test
For
Homogeneity
of Variance
General ANOVA Setting
DCOVA
 Investigator controls one or more factors of interest

 Each factor contains two or more levels
 Levels can be numerical or categorical
 Different levels produce different groups
 Think of each group as a sample from a different
population
 Observe effects on the dependent variable
 Are the groups the same?
 Experimental design: the plan used to collect the data

Completely Randomized Design
DCOVA
 Experimental units (subjects) are assigned
randomly to groups
 Subjects are assumed homogeneous
 Only one factor or independent variable
 With two or more levels
 Analyzed by one-factor analysis of variance
(ANOVA)

One-Way Analysis of Variance
DCOVA
 Evaluate the difference among the means of three
or more groups
Examples: Accident rates for 1st, 2nd, and 3rd shift
Expected mileage for five brands of tires
 Assumptions
 Populations are normally distributed
 Populations have equal variances
 Samples are randomly and independently drawn

Hypotheses of One-Way ANOVA
DCOVA

H0 : μ1  μ2  μ3    μc
 All population means are equal
 i.e., no factor effect (no variation in means among
groups)
 H1 : Not all of the population means are the same

 At least one population mean is different
 i.e., there is a factor effect
 Does not mean that all population means are
different (some pairs may be the same)

One-Way ANOVA
DCOVA
H0 : μ1  μ2  μ3    μc
H1 : Not all μ j are the same
The Null Hypothesis is True
All Means are the same:
(No Factor Effect)
μ1  μ 2  μ 3
One-Way ANOVA DCOVA
(continued)
H0 : μ1  μ2  μ3    μc
H1 : Not all μ j are the same
The Null Hypothesis is NOT true
At least one of the means is different
(Factor Effect is present)
or
μ1  μ2  μ3 μ1  μ2  μ3
Partitioning the Variation
DCOVA
 Total variation can be split into two parts:
SST = SSA + SSW
SST = Total Sum of Squares

(Total variation)
SSA = Sum of Squares Among Groups
(Among-group variation)
SSW = Sum of Squares Within Groups
(Within-group variation)

(continued)
DCOVA
SST = SSA + SSW
Total Variation = the aggregate variation of the individual

data values across the various factor levels (SST)
Among-Group Variation = variation among the factor

sample means (SSA)
Within-Group Variation = variation that exists among

the data values within a particular factor level (SSW)

Partition of Total Variation
DCOVA
Total Variation (SST)
Variation Due to Variation Due to Random

= Factor (SSA) + Error (SSW)

Total Sum of Squares
DCOVA
SST = SSA + SSW

c nj
SST   ( Xij  X) 2
j1 i 1
Where:
SST = Total sum of squares
c = number of groups or levels
nj = number of observations in group j
Xij = ith observation from group j
X = grand mean (mean of all data values)
Total Variation DCOVA
(continued)
2 2 2
SST  ( X 11  X )  ( X 12  X )      ( X cn  X )
c
Response, X
Group 1 Group 2 Group 3

Among-Group Variation
DCOVA
SST = SSA + SSW

c
SSA   n j ( X j  X)2
j1
Where:
SSA = Sum of squares among groups
c = number of groups
nj = sample size from group j
Xj = sample mean from group j
(continued)
c
DCOVA
SSA   n j ( X j  X)2
j1
SSA
Variation Due to
Differences Among Groups MSA 
c 1
Mean Square Among =
SSA/degrees of freedom
i j

DCOVA
(continued)
SSA  n1 (X1  X)  n 2 (X 2  X)      n c (X c  X)
2 2 2
Response, X
X3
X2 X
X1

Within-Group Variation
DCOVA
SST = SSA + SSW

c nj
SSW    ( Xij  X j ) 2
j1 i 1
Where:
SSW = Sum of squares within groups
nj = sample size from group j
Xj = sample mean from group j
Xij = ith observation in group j
(continued)
nj
DCOVA
c
SSW    ( Xij  X j )2
j1 i1
SSW
Summing the variation
MSW 
within each group and then
adding over all groups nc
Mean Square Within =
SSW/degrees of freedom
μj
DCOVA
(continued)
SSW  (X11  X1 )  (X12  X 2 )      (X cn c  X c )

2 2 2
Response, X
X3
X2
X1

Obtaining the Mean Squares
DCOVA
The Mean Squares are obtained by dividing the various
sum of squares by their associated degrees of freedom
SSA Mean Square Among

MSA  (d.f. = c-1)
c 1
SSW Mean Square Within
MSW 
nc (d.f. = n-c)
SST
MST  Mean Square Total
n 1 (d.f. = n-1)
One-Way ANOVA Table
DCOVA
Source of Degrees of Sum Of Mean Square F

Variation Freedom Squares (Variance)
Among SSA FSTAT =

c-1 SSA MSA =
Groups c-1
MSA
Within SSW
n-c SSW MSW = MSW
Groups n-c
Total n–1 SST
n = sum of the sample sizes from all groups
df = degrees of freedom
One-Way ANOVA
F Test Statistic DCOVA
H0: μ1= μ2 = … = μc
H1: At least two population means are different
 Test statistic MSA
FSTAT 
MSW
MSA is mean squares among groups
MSW is mean squares within groups
 Degrees of freedom
 df1 = c – 1 (c = number of groups)
 df2 = n – c (n = sum of sample sizes from all populations)
Interpreting One-Way ANOVA
F Statistic DCOVA
 The F statistic is the ratio of the among

estimate of variance and the within estimate
of variance
 The ratio must always be positive
 df1 = c -1 will typically be small
 df2 = n - c will typically be large
Decision Rule:
 Reject H if F 
0 STAT > Fα,
otherwise do not reject
0
H0 Do not
reject H0
Reject H0
Fα
One-Way ANOVA
F Test Example DCOVA
You want to see if three Club 1 Club 2 Club 3

different golf clubs yield 254 234 200
different distances. You 263 218 222
randomly select five 241 235 197
measurements from trials on 237 227 206
an automated driving 251 216 204
machine for each club. At the
0.05 significance level, is
there a difference in mean
distance?

One-Way ANOVA Example:
Scatter Plot DCOVA
Distance
270
Club 1 Club 2 Club 3
254 234 200 260 •
••
263
241
218
235
222
197
250
X1
240 •
237 227 206 230
• ••
251 216 204
220 •
X2 • X
••
210
x1  249.2 x 2  226.0 x 3  205.8 200 •• X3
••
190
x  227.0
1 2 3
Copyright ©2011 Pearson Education Club 11-26
One-Way ANOVA Example
Computations DCOVA
Club 1 Club 2 Club 3 X1 = 249.2 n1 = 5

254 234 200 X2 = 226.0 n2 = 5
263 218 222
241 235 197 X3 = 205.8 n3 = 5
237 227 206 n = 15
251 216 204 X = 227.0
c=3
SSA = 5 (249.2 – 227)2 + 5 (226 – 227)2 + 5 (205.8 – 227)2 = 4716.4
SSW = (254 – 249.2)2 + (263 – 249.2)2 +…+ (204 – 205.8)2 = 1119.6
MSA = 4716.4 / (3-1) = 2358.2 2358.2

F STAT   25.275
MSW = 1119.6 / (15-3) = 93.3 93.3

One-Way ANOVA Example
Solution DCOVA
H 0: μ 1 = μ 2 = μ 3 Test Statistic:
H1: μj not all equal
MSA 2358.2
 = 0.05 FSTAT    25.275
MSW 93.3
df1= 2 df2 = 12
Critical Decision:
Value:
Reject H0 at  = 0.05
Fα = 3.89
Conclusion:
 = .05
There is evidence that
0 Do not Reject H 0
at least one μj differs
reject H0
FSTAT = 25.275 from the rest
Fα = 3.89
One-Way ANOVA
Excel Output DCOVA
SUMMARY
Groups Count Sum Average Variance
Club 1 5 1246 249.2 108.2
Club 2 5 1130 226 77.5
Club 3 5 1029 205.8 94.2
ANOVA
Source of
SS df MS F P-value F crit
Variation
Between
4716.4 2 2358.2 25.275 4.99E-05 3.89
Groups
Within
1119.6 12 93.3
Groups
Total 5836.0 14

The Tukey-Kramer Procedure
DCOVA
 Tells which population means are significantly

different
 e.g.: μ1 = μ2  μ3
 Done after rejection of equal means in ANOVA
 Allows paired comparisons
 Compare absolute mean differences with critical
range
μ1= μ2 μ3 x

Tukey-Kramer Critical Range
DCOVA
MSW  1 1 
Critical Range  Q α 
2  n j n j' 
where:
Qα = Upper Tail Critical Value from Studentized
Range Distribution with c and n - c degrees of
freedom (see appendix E.10 table)
MSW = Mean Square Within
nj and nj’ = Sample sizes from groups j and j’

The Tukey-Kramer Procedure:
Example DCOVA
1. Compute absolute mean
Club 1 Club 2 Club 3 differences:
254 234 200
263 218 222 x1  x 2  249.2  226.0  23.2
241 235 197 x1  x 3  249.2  205.8  43.4
237 227 206
251 216 204 x 2  x 3  226.0  205.8  20.2
2. Find the Qα value from the table in appendix E.10 with

c = 3 and (n – c) = (15 – 3) = 12 degrees of
freedom:
Q α  3.77
The Tukey-Kramer Procedure:
Example
(continued)
3. Compute Critical Range: DCOVA
MSW  1 1  93.3  1 1 
Critical Range  Q α   3.77     16.285
 
2  n j n j'  2 5 5
4. Compare:
5. All of the absolute mean differences x1  x 2  23.2
are greater than critical range.
Therefore there is a significant x1  x 3  43.4
difference between each pair of
means at 5% level of significance. x 2  x 3  20.2
Thus, with 95% confidence we can conclude
that the mean distance for club 1 is greater
than club 2 and 3, and club 2 is greater than
club 3.
ANOVA Assumptions
DCOVA
 Randomness and Independence

 Select random samples from the c groups (or
randomly assign the levels)
 Normality
 The sample values for each group are from a normal
population
 Homogeneity of Variance
 All populations sampled from have the same
variance
 Can be tested with Levene’s Test

ANOVA Assumptions
Levene’s Test
DCOVA
 Tests the assumption that the variances of each

population are equal.
 First, define the null and alternative hypotheses:
 H0: σ21 = σ22 = …=σ2c
 H1: Not all σ2j are equal
 Second, compute the absolute value of the difference
between each value and the median of each group.
 Third, perform a one-way ANOVA on these absolute
differences.

Levene Homogeneity Of Variance
Test Example
DCOVA
H0: σ21 = σ22 = σ23

H1: Not all σ2j are equal
Calculate Medians Calculate Absolute Differences
Club 1 Club 2 Club 3 Club 1 Club 2 Club 3

237 216 197 14 11 7
241 218 200 10 9 4
251 227 204 Median 0 0 0
254 234 206 3 7 2
263 235 222 12 8 18

Levene Homogeneity Of Variance
Test Example (continued)
Anova: Single Factor DCOVA
SUMMARY
Groups Count Sum Average Variance
Since the
Club 1 5 39 7.8 36.2 p-value is
Club 2 5 35 7 17.5 greater
Club 3 5 31 6.2 50.2 than 0.05
there is
P- insufficient
Source of Variation SS df MS F value F crit
evidence
Between Groups 6.4 2 3.2 0.092 0.912 3.885
of a
Within Groups 415.6 12 34.6
difference
Total 422 14
in the
variances

Factorial Design:
Two-Way ANOVA DCOVA
 Examines the effect of

 Two factors of interest on the dependent
variable
 e.g., Percent carbonation and line speed on soft drink
bottling process
 Interaction between the different levels of these
two factors
 e.g., Does the effect of one particular carbonation
level depend on which level the line speed is set?

Two-Way ANOVA
(continued)
DCOVA
 Assumptions
 Populations are normally distributed

 Populations have equal variances
 Independent random samples are
drawn

Two-Way ANOVA
Sources of Variation DCOVA
Two Factors of interest: A and B

r = number of levels of factor A
c = number of levels of factor B
n’ = number of replications for each cell
n = total number of observations in all cells
n = (r)(c)(n’)
Xijk = value of the kth observation of level i of
factor A and level j of factor B
Two-Way ANOVA DCOVA
Sources of Variation (continued)
SST = SSA + SSB + SSAB + SSE Degrees of

Freedom:
SSA r–1
Factor A Variation
SST SSB c–1

Factor B Variation
Total Variation
SSAB
Variation due to interaction (r – 1)(c – 1)
between A and B
n-1
SSE rc(n’ – 1)
Random variation (Error)

Two-Way ANOVA Equations
DCOVA
Total Variation: r c n
SST   ( Xijk  X) 2
i1 j1 k 1
Factor A Variation: r
SSA  cn  ( Xi..  X)
 2
i 1
Factor B Variation: c
SSB  rn ( X. j.  X)2
j1

(continued)
DCOVA
Interaction Variation:
r c
SSAB  n ( Xij.  Xi..  X.j.  X)2
i1 j1
Sum of Squares Error:

r c n
SSE   ( Xijk  Xij. ) 2
i 1 j1 k 1

(continued)
r c n
where:  X
i1 j 1 k 1
ijk DCOVA
X  Grand Mean
c n
rcn
 X
j1 k 1
ijk
Xi..   Mean of ith level of factor A (i  1, 2, ..., r)

cn
r n
 X ijk
X. j.  i1 k 1
 Mean of jth level of factor B (j  1, 2, ..., c)
rn
Xijk
n
Xij.  
r = number of levels of factor A
 Mean of cell ij c = number of levels of factor B
k 1 n n’ = number of replications in each cell

Mean Square Calculations
DCOVA
SSA
MSA  Mean square factor A 
r 1
SSB
MSB  Mean square factor B 
c 1
SSAB
MSAB  Mean square interaction 
(r  1)(c  1)
SSE
MSE  Mean square error 
rc(n'1)
Two-Way ANOVA:
The F Test Statistics DCOVA
F Test for Factor A Effect

H0: μ1..= μ2.. = μ3..= • • = µr..
MSA Reject H0 if
H1: Not all μi.. are equal F STAT 
MSE FSTAT > Fα
F Test for Factor B Effect

H0: μ.1. = μ.2. = μ.3.= • • = µ.c.
MSB Reject H0 if
H1: Not all μ.j. are equal F STAT 
MSE FSTAT > Fα
F Test for Interaction Effect

H0: the interaction of A and B is
equal to zero MSAB
H1: interaction of A and B is not F STAT  Reject H0 if
MSE
zero FSTAT > Fα
Two-Way ANOVA
Summary Table DCOVA
Source of Sum of Degrees of Mean

F
Variation Squares Freedom Squares
MSA MSA
Factor A SSA r–1
= SSA /(r – 1) MSE
MSB MSB
Factor B SSB c–1
= SSB /(c – 1) MSE
AB MSAB MSAB
SSAB (r – 1)(c – 1)
(Interaction) = SSAB / (r – 1)(c – 1) MSE
MSE =
Error SSE rc(n’ – 1)
SSE/rc(n’ – 1)
Total SST n–1

Features of Two-Way ANOVA
F Test DCOVA
 Degrees of freedom always add up

 n-1 = rc(n’-1) + (r-1) + (c-1) + (r-1)(c-1)
 Total = error + factor A + factor B + interaction
 The denominators of the F Test are always the
same but the numerators are different
 The sums of squares always add up
 SST = SSE + SSA + SSB + SSAB
 Total = error + factor A + factor B + interaction

Examples:
Interaction vs. No Interaction
DCOVA
 Interaction is present:
 No interaction: line some line segments
segments are parallel not parallel
Factor B Level 1
Mean Response
Mean Response
Factor B Level 1
Factor B Level 3
Factor B Level 2
Factor B Level 2
Factor B Level 3
Factor A Levels Factor A Levels

Multiple Comparisons:
The Tukey Procedure DCOVA
 Unless there is a significant interaction, you

can determine the levels that are significantly
different using the Tukey procedure
 Consider all absolute mean differences and
compare to the calculated critical range
 Example: Absolute differences X1..  X 2..
for factor A, assuming three levels:
X1..  X3..
X 2..  X3..
Multiple Comparisons:
The Tukey Procedure DCOVA
 Critical Range for Factor A:

MSE
Critical Range  Qα
c n'
(where Qα is from Table E.10 with r and rc(n’–1) d.f.)
 Critical Range for Factor B:

MSE
Critical Range  Qα
r n'
(where Qα is from Table E.10 with c and rc(n’–1) d.f.)

Chapter Summary
 Described one-way analysis of variance
 The logic of ANOVA
 ANOVA assumptions
 F test for difference in c means
 The Tukey-Kramer procedure for multiple comparisons
 The Levene test for homogeneity of variance
 Described two-way analysis of variance
 Examined effects of multiple factors
 Examined interaction between factors

Statistics for Managers using
Microsoft Excel
6th Edition
Online Topic
The Randomized Block Design

Learning Objective
 To learn the basic structure and use of a randomized block design

The Randomized Block Design
DCOVA
 Like One-Way ANOVA, we test for equal

population means (for different factor levels, for
example)...
 ...but we want to control for possible variation

from a second factor (with two or more levels)
 Levels of the secondary factor are called blocks

DCOVA
 Total variation can now be split into three parts:
SST = SSA + SSBL + SSE
SST = Total variation

SSA = Among-Group variation
SSBL = Among-Block variation
SSE = Random variation

Sum of Squares for Blocks
DCOVA
r
SSBL  c  ( Xi.  X) 2
i1
Where:
r = number of blocks
Xi. = mean of all values in block i
DCOVA
 Total variation can now be split into three parts:
SST and SSA are SSE = SST – (SSA + SSBL)

computed as they were
in One-Way ANOVA

Mean Squares
DCOVA
SSBL
MSBL  Mean square blocking 
r 1
SSA
MSA  Mean square among groups 
c 1
SSE
MSE  Mean square error 
(r  1)(c  1)

Randomized Block ANOVA Table
DCOVA
Source of SS df MS F
Variation
Among MSBL
Blocks SSBL r-1 MSBL
MSE
Among SSA c-1 MSA MSA
Groups
MSE
Error SSE (r–1)(c-1) MSE
Total SST rc - 1
c = number of populations rc = total number of observations
r = number of blocks df = degrees of freedom
Testing For Factor Effect
DCOVA
H 0 : μ .1  μ .2  μ .3      μ .c
H1 : Not all population means are equal
MSA
FSTAT =
MSE  Main Factor test: df1 = c – 1
df2 = (r – 1)(c – 1)
Reject H0 if FSTAT > Fα

Test For Block Effect
DCOVA
H 0 : μ1.  μ 2.  μ 3.  ...  μ r.
H1 : Not all block means are equal
MSBL
FSTAT =
MSE  Blocking test: df1 = r – 1
df2 = (r – 1)(c – 1)
Reject H0 if FSTAT > Fα

Topic Summary
 Examined the basic structure and use of a randomized block

design

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Copyright ©2011 Pearson Education 11-1

Copyright ©2011 Pearson Education 11-2

 Investigator controls one or more factors of interest

 Levels can be numerical or categorical

 Different levels produce different groups

 Think of each group as a sample from a different

 Experimental design: the plan used to collect the data

Copyright ©2011 Pearson Education 11-4

Copyright ©2011 Pearson Education 11-5

 Populations have equal variances

 Samples are randomly and independently drawn

Copyright ©2011 Pearson Education 11-6

 H1 : Not all of the population means are the same

Copyright ©2011 Pearson Education 11-7

 Total variation can be split into two parts:

SST = SSA + SSW

SST = Total Sum of Squares

Copyright ©2011 Pearson Education 11-10

Total Variation = the aggregate variation of the individual

Among-Group Variation = variation among the factor

Within-Group Variation = variation that exists among

Copyright ©2011 Pearson Education 11-11

Variation Due to Variation Due to Random

Copyright ©2011 Pearson Education 11-12

SST = SSA + SSW

Group 1 Group 2 Group 3

Copyright ©2011 Pearson Education 11-14

SST = SSA + SSW

Copyright ©2011 Pearson Education 11-16

Group 1 Group 2 Group 3

SST = SSA + SSW

SSW  (X11  X1 )  (X12  X 2 )      (X cn c  X c )

Group 1 Group 2 Group 3

SSA Mean Square Among

Source of Degrees of Sum Of Mean Square F

Among SSA FSTAT =

 The F statistic is the ratio of the among

You want to see if three Club 1 Club 2 Club 3

Copyright ©2011 Pearson Education 11-25

Club 1 Club 2 Club 3 X1 = 249.2 n1 = 5

MSA = 4716.4 / (3-1) = 2358.2 2358.2

Copyright ©2011 Pearson Education 11-27

Copyright ©2011 Pearson Education 11-29

 Tells which population means are significantly

Copyright ©2011 Pearson Education 11-30

Copyright ©2011 Pearson Education 11-31

2. Find the Qα value from the table in appendix E.10 with

 Randomness and Independence

Copyright ©2011 Pearson Education 11-34

 Tests the assumption that the variances of each

Copyright ©2011 Pearson Education 11-35

H0: σ21 = σ22 = σ23

Calculate Medians Calculate Absolute Differences

Club 1 Club 2 Club 3 Club 1 Club 2 Club 3

Copyright ©2011 Pearson Education 11-36

Copyright ©2011 Pearson Education 11-37

 Examines the effect of

Copyright ©2011 Pearson Education 11-38

 Populations are normally distributed

Copyright ©2011 Pearson Education 11-39

Two Factors of interest: A and B

SST = SSA + SSB + SSAB + SSE Degrees of