UNIT 10

ANALYSIS OF VARIANCE TECHNIQUES

 What is ANOVA?
 The test of hypothesis concerning the equality of two
population means makes use of both the Z and t tests.
 However, if there are more than two populations, the
test for the equality of means could be carried out by
considering two populations at a time. This would be a
very cumbersome procedure.
 One easy way out could be to use the analysis of
variance (ANOVA) technique. The technique helps in
performing this test in one go and, therefore, is
considered to be important technique of analysis for
the researcher.
 SLIDE 13-2

What is ANOVA?
 The basic principle underlying the technique is that the total
variation in the dependent variable is broken into two parts—one
which can be attributed to some specific causes and the other that
may be attributed to chance.
 The one which is attributed to the specific causes is called the
variation between samples and the one which is attributed to
chance is termed as the variation within samples.
 Therefore, in ANOVA, the total variance may be decomposed into
various components corresponding to the sources of the variation.
 For eg. the sales of chairs could differ because of the various
styles and sizes of stores selling them. The average telephone
bill of the households could be different because they belong to
different income groups and so on.
 SLIDE 13-3

What is ANOVA?
In ANOVA, the dependent variable in question is
metric (interval or ratio scale), whereas the
independent variables are categorical (nominal
scale).
If there is one independent variable (one factor)
divided into various categories, we have one-way
or one-factor analysis of variance.
In the two-way or two-factor analysis of variance,
two factors each divided into the various
categories are involved.
 SLIDE 13-4

Completely Randomized Design in a

One-way ANOVA
 In this design, there is one dependent variable and
one independent variable.
 The dependent variable is metric (interval/ratio scale)
whereas the independent variable is categorical
(nominal scale).
 A sample is drawn at random from each category of
the independent variable.
 The size of the sample from each category could be
equal or different.
 SLIDE 13-10

Randomized Block Design in Two-

way ANOVA
 The main limitation of the completely randomized
design is that all extraneous variables were assumed
to be constant over all the treatment groups which
may not be true.
 There may be extraneous variables influencing the
dependent variable.
 In the randomized block design it is possible to
separate the influence of one extraneous variable on
a particular dependent variable, thereby providing a
clear picture of the impact of treatment on test units.
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Randomized Block Design in Two-

way ANOVA
 Assume that the sales of a product is influenced not only by the price
level (low, medium and high) but also by the size of the stores. The
price level is assumed to be independent variable whereas the size of
the stores are extraneous variable and could be treated as different
blocks.
 The hypothesis to be tested are the following:

I Price
H0 : μA = μB = μC (Assuming three price level)
H1 : At least the two means are not same.
II (Blocks or Stores)
H0 : ν1 = ν2 = ν3 (Assuming three different sizes of stores)
H1 : At least two means are not same.
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Randomized Block Design in Two-

way ANOVA
 The total sum of squares (TSS) and treatment sum of squares
(TrSS) could be computed as discussed in completely
randomized design. Now, we would also have another
component called block sum of squares (SSB) which is due to
different store sizes and is computed as:

Where, T•j = Total of the values in the jth block.

The error sum of squares would be computed as:
SSE = TSS – TrSS – SSB
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Randomized Block Design in Two-

way ANOVA
 The above results could be presented in a two-way ANOVA table
as below:

For a given level of significance, the computed F corresponding to

treatments and blocks could be compared with the corresponding
tabulated values to accept of reject the two hypothesis.