Contemporary Business
Statistics, 3e
by
Williams, Sweeney, and Anderson
Slides by
JOHN
LOUCKS
St. Edward’s
University
© 2009 Cengage South-Western. All Rights Reserved Slide 1
Chapter 13, Part A
Experimental Design and Analysis of Variance
An Introduction to Experimental Design
and Analysis of Variance
Analysis of Variance and
the Completely Randomized Design
Multiple Comparison Procedures
© 2009 Cengage South-Western. All Rights Reserved Slide 2
An Introduction to Experimental Design
and Analysis of Variance
Statistical studies can be classified as being either
experimental or observational.
In an experimental study, one or more factors are
controlled so that data can be obtained about how the
factors influence the variables of interest.
In an observational study, no attempt is made to
control the factors.
Cause-and-effect relationships are easier to establish
in experimental studies than in observational studies.
Analysis of variance (ANOVA) can be used to analyze
the data obtained from experimental or observational
studies.
© 2009 Cengage South-Western. All Rights Reserved Slide 3
An Introduction to Experimental Design
and Analysis of Variance
In this chapter three types of experimental designs
are introduced.
• a completely randomized design
• a randomized block design
• a factorial experiment
© 2009 Cengage South-Western. All Rights Reserved Slide 4
An Introduction to Experimental Design
and Analysis of Variance
A factor is a variable that the experimenter has
selected for investigation.
A treatment is a level of a factor.
Experimental units are the objects of interest in the
experiment.
A completely randomized design is an experimental
design in which the treatments are randomly
assigned to the experimental units.
© 2009 Cengage South-Western. All Rights Reserved Slide 5
Analysis of Variance: A Conceptual Overview
Analysis of Variance (ANOVA) can be used to test
for the equality of three or more population means.
Data obtained from observational or experimental
studies can be used for the analysis.
We want to use the sample results to test the
following hypotheses:
H0: 1=2=3=. . . = k
Ha: Not all population means are equal
© 2009 Cengage South-Western. All Rights Reserved Slide 6
Analysis of Variance: A Conceptual Overview
H0: 1=2=3=. . . = k
Ha: Not all population means are equal
If H0 is rejected, we cannot conclude that all
population means are different.
Rejecting H0 means that at least two population
means have different values.
© 2009 Cengage South-Western. All Rights Reserved Slide 7
Analysis of Variance: A Conceptual Overview
Assumptions for Analysis of Variance
For each population, the response (dependent)
variable is normally distributed.
The variance of the response variable, denoted 2,
is the same for all of the populations.
The observations must be independent.
© 2009 Cengage South-Western. All Rights Reserved Slide 8
Analysis of Variance: A Conceptual Overview
Sampling Distribution of x Given H0 is True
Sample means are close together
because there is only
one sampling distribution
when H0 is true.
2
x2
n
x2 x1 x3
© 2009 Cengage South-Western. All Rights Reserved Slide 9
Analysis of Variance: A Conceptual Overview
Sampling Distribution of x Given H0 is False
Sample means come from
different sampling distributions
and are not as close together
when H0 is false.
x3 3 x1 1 2 x2
© 2009 Cengage South-Western. All Rights Reserved Slide 10
Analysis of Variance and
the Completely Randomized Design
Between-Treatments Estimate of Population Variance
Within-Treatments Estimate of Population Variance
Comparing the Variance Estimates: The F Test
ANOVA Table
© 2009 Cengage South-Western. All Rights Reserved Slide 11
Between-Treatments Estimate
of Population Variance 2
The estimate of 2 based on the variation of the
sample means is called the mean square due to
treatments and is denoted by MSTR.
j j
n (
j 1
x x ) 2
MSTR
k1
Denominator is the Numerator is called
degrees of freedom the sum of squares due
associated with SSTR to treatments (SSTR)
© 2009 Cengage South-Western. All Rights Reserved Slide 12
Within-Treatments Estimate
of Population Variance 2
The estimate of 2 based on the variation of the
sample observations within each sample is called the
mean square error and is denoted by MSE.
k
(n j 1) s2j
j1
MSE
nT k
Numerator is called
Denominator is the the sum of squares
degrees of freedom due to error (SSE)
associated with SSE
© 2009 Cengage South-Western. All Rights Reserved Slide 13
Comparing the Variance Estimates: The F Test
If the null hypothesis is true and the ANOVA
assumptions are valid, the sampling distribution of
MSTR/MSE is an F distribution with MSTR d.f.
equal to k - 1 and MSE d.f. equal to nT - k.
If the means of the k populations are not equal, the
value of MSTR/MSE will be inflated because MSTR
overestimates 2.
Hence, we will reject H0 if the resulting value of
MSTR/MSE appears to be too large to have been
selected at random from the appropriate F
distribution.
© 2009 Cengage South-Western. All Rights Reserved Slide 14
Comparing the Variance Estimates: The F Test
Sampling Distribution of MSTR/MSE
Sampling Distribution
of MSTR/MSE
Reject H0
Do Not Reject H0
MSTR/MSE
F
Critical Value
© 2009 Cengage South-Western. All Rights Reserved Slide 15
ANOVA Table
for a Completely Randomized Design
Source of Sum of Degrees of Mean p-
Variation Squares Freedom Square F Value
SSTR MSTR
Treatments SSTR k-1 MSTR
k - 1 MSE
SSE
Error SSE nT - k MSE
nT - k
Total SST nT - 1
SST’s degrees of freedom
SST is partitioned (d.f.) are partitioned into
into SSTR and SSE.
SSTR’s d.f. and SSE’s d.f.
© 2009 Cengage South-Western. All Rights Reserved Slide 16
ANOVA Table
for a Completely Randomized Design
SST divided by its degrees of freedom nT – 1 is the
overall sample variance that would be obtained if we
treated the entire set of observations as one data set.
With the entire data set as one sample, the formula
for computing the total sum of squares, SST, is:
k nj
SST ( xij x ) SSTR SSE
2
j 1 i 1
© 2009 Cengage South-Western. All Rights Reserved Slide 17
ANOVA Table
for a Completely Randomized Design
ANOVA can be viewed as the process of partitioning
the total sum of squares and the degrees of freedom
into their corresponding sources: treatments and error.
Dividing the sum of squares by the appropriate
degrees of freedom provides the variance estimates
and the F value used to test the hypothesis of equal
population means.
© 2009 Cengage South-Western. All Rights Reserved Slide 18
Test for the Equality of k Population Means
Hypotheses
H0: 1=2=3=. . . = k
Ha: Not all population means are equal
Test Statistic
F = MSTR/MSE
© 2009 Cengage South-Western. All Rights Reserved Slide 19
Test for the Equality of k Population Means
Rejection Rule
p-value Approach: Reject H0 if p-value <
Critical Value Approach: Reject H0 if F > F
where the value of F is based on an
F distribution with k - 1 numerator d.f.
and nT - k denominator d.f.
© 2009 Cengage South-Western. All Rights Reserved Slide 20
Testing for the Equality of k Population Means:
A Completely Randomized Design
Example: AutoShine, Inc.
AutoShine, Inc. is considering marketing a long-
lasting car wax. Three different waxes (Type 1, Type 2,
and Type 3) have been developed.
In order to test the durability of these waxes, 5 new
cars were waxed with Type 1, 5 with Type 2, and 5
with Type 3. Each car was then repeatedly run
through an automatic carwash until the wax coating
showed signs of deterioration.
© 2009 Cengage South-Western. All Rights Reserved Slide 21
Testing for the Equality of k Population Means:
A Completely Randomized Design
Example: AutoShine, Inc.
The number of times each car went through the
carwash before its wax deteriorated is shown on the
next slide. AutoShine, Inc. must decide which wax
to market. Are the three waxes equally effective?
Factor . . . Car wax
Treatments . . . Type I, Type 2, Type 3
Experimental units . . . Cars
Response variable . . . Number of washes
© 2009 Cengage South-Western. All Rights Reserved Slide 22
Testing for the Equality of k Population Means:
A Completely Randomized Design
Wax Wax Wax
Observation Type 1 Type 2 Type 3
1 27 33 29
2 30 28 28
3 29 31 30
4 28 30 32
5 31 30 31
Sample Mean 29.0 30.4 30.0
Sample Variance 2.5 3.3 2.5
© 2009 Cengage South-Western. All Rights Reserved Slide 23
Testing for the Equality of k Population Means:
A Completely Randomized Design
Hypotheses
H0: 1=2=3
Ha: Not all the means are equal
where:
1 = mean number of washes using Type 1 wax
2 = mean number of washes using Type 2 wax
3 = mean number of washes using Type 3 wax
© 2009 Cengage South-Western. All Rights Reserved Slide 24
Testing for the Equality of k Population Means:
A Completely Randomized Design
Mean Square Between Treatments
Because the sample sizes are all equal:
x ( x1 x2 x3 )/3 = (29 + 30.4 + 30)/3 = 29.8
SSTR = 5(29–29.8)2 + 5(30.4–29.8)2 + 5(30–29.8)2 = 5.2
MSTR = 5.2/(3 - 1) = 2.6
Mean Square Error
SSE = 4(2.5) + 4(3.3) + 4(2.5) = 33.2
MSE = 33.2/(15 - 3) = 2.77
© 2009 Cengage South-Western. All Rights Reserved Slide 25
Testing for the Equality of k Population Means:
A Completely Randomized Design
Rejection Rule
p-Value Approach: Reject H0 if p-value < .05
Critical Value Approach: Reject H0 if F > 3.89
where F.05 = 3.89 is based on an F distribution
with 2 numerator degrees of freedom and 12
denominator degrees of freedom
© 2009 Cengage South-Western. All Rights Reserved Slide 26
Testing for the Equality of k Population Means:
A Completely Randomized Design
Test Statistic
F = MSTR/MSE = 2.60/2.77 = .939
Conclusion
The p-value is greater than .10, where F = 2.81.
(Excel provides a p-value of .42.)
Therefore, we cannot reject H0.
There is insufficient evidence to conclude that
the mean number of washes for the three wax
types are not all the same.
© 2009 Cengage South-Western. All Rights Reserved Slide 27
Testing for the Equality of k Population Means:
A Completely Randomized Design
ANOVA Table
Source of Sum of Degrees of Mean
Variation Squares Freedom Squares F p-Value
Treatments 5.2 2 2.60 .939 .42
Error 33.2 12 2.77
Total 38.4 14
© 2009 Cengage South-Western. All Rights Reserved Slide 28
Testing for the Equality of k Population Means:
An Observational Study
Example: Reed Manufacturing
Janet Reed would like to know if there is any
significant difference in the mean number of hours
worked per week for the department managers at her
three manufacturing plants (in Buffalo, Pittsburgh,
and Detroit).
An F test will be conducted using = .05.
© 2009 Cengage South-Western. All Rights Reserved Slide 29
Testing for the Equality of k Population Means:
An Observational Study
Example: Reed Manufacturing
A simple random sample of five managers from
each of the three plants was taken and the number of
hours worked by each manager in the previous week
is shown on the next slide.
Factor . . . Manufacturing plant
Treatments . . . Buffalo, Pittsburgh, Detroit
Experimental units . . . Managers
Response variable . . . Number of hours worked
© 2009 Cengage South-Western. All Rights Reserved Slide 30
Testing for the Equality of k Population Means:
An Observational Study
Plant 1 Plant 2 Plant 3
Observation Buffalo Pittsburgh Detroit
1 48 73 51
2 54 63 63
3 57 66 61
4 54 64 54
5 62 74 56
Sample Mean 55 68 57
Sample Variance 26.0 26.5 24.5
© 2009 Cengage South-Western. All Rights Reserved Slide 31
Testing for the Equality of k Population Means:
An Observational Study
p -Value and Critical Value Approaches
1. Develop the hypotheses.
H0: 1= 2= 3
Ha: Not all the means are equal
where:
1 = mean number of hours worked per
week by the managers at Plant 1
2 = mean number of hours worked per
week by the managers at Plant 2
3 = mean number of hours worked per
week by the managers at Plant 3
© 2009 Cengage South-Western. All Rights Reserved Slide 32
Testing for the Equality of k Population Means:
An Observational Study
p -Value and Critical Value Approaches
2. Specify the level of significance. = .05
3. Compute the value of the test statistic.
Mean Square Due to Treatments
(Sample sizes are all equal.)
x = (55 + 68 + 57)/3 = 60
SSTR = 5(55 - 60)2 + 5(68 - 60)2 + 5(57 - 60)2 = 490
MSTR = 490/(3 - 1) = 245
© 2009 Cengage South-Western. All Rights Reserved Slide 33
Testing for the Equality of k Population Means:
An Observational Study
p -Value and Critical Value Approaches
3. Compute the value of the test statistic. (con’t.)
Mean Square Due to Error
SSE = 4(26.0) + 4(26.5) + 4(24.5) = 308
MSE = 308/(15 - 3) = 25.667
F = MSTR/MSE = 245/25.667 = 9.55
© 2009 Cengage South-Western. All Rights Reserved Slide 34
Testing for the Equality of k Population Means:
An Observational Study
ANOVA Table
Source of Sum of Degrees of Mean
Variation Squares Freedom Square F p-Value
Treatment 490 2 245 9.55 .0033
Error 308 12 25.667
Total 798 14
© 2009 Cengage South-Western. All Rights Reserved Slide 35
Testing for the Equality of k Population Means:
An Observational Study
p –Value Approach
4. Compute the p –value.
With 2 numerator d.f. and 12 denominator d.f.,
the p-value is .01 for F = 6.93. Therefore, the
p-value is less than .01 for F = 9.55.
5. Determine whether to reject H0.
The p-value < .05, so we reject H0.
We have sufficient evidence to conclude that the
mean number of hours worked per week by
department managers is not the same at all 3 plant.
© 2009 Cengage South-Western. All Rights Reserved Slide 36
Testing for the Equality of k Population Means:
An Observational Study
Critical Value Approach
4. Determine the critical value and rejection rule.
Based on an F distribution with 2 numerator
d.f. and 12 denominator d.f., F.05 = 3.89.
Reject H0 if F > 3.89
5. Determine whether to reject H0.
Because F = 9.55 > 3.89, we reject H0.
We have sufficient evidence to conclude that the
mean number of hours worked per week by
department managers is not the same at all 3 plant.
© 2009 Cengage South-Western. All Rights Reserved Slide 37
Multiple Comparison Procedures
Suppose that analysis of variance has provided
statistical evidence to reject the null hypothesis of
equal population means.
Fisher’s least significant difference (LSD) procedure
can be used to determine where the differences
occur.
© 2009 Cengage South-Western. All Rights Reserved Slide 38
Fisher’s LSD Procedure
Hypotheses
H 0 : i j
H a : i j
Test Statistic
xi x j
t
MSE( 1 n 1 n )
i j
© 2009 Cengage South-Western. All Rights Reserved Slide 39
Fisher’s LSD Procedure
Rejection Rule
p-value Approach:
Reject H0 if p-value <
Critical Value Approach:
Reject H0 if t < -ta/2 or t > ta/2
where the value of ta/2 is based on a
t distribution with nT - k degrees of freedom.
© 2009 Cengage South-Western. All Rights Reserved Slide 40
Fisher’s LSD Procedure_ _
Based on the Test Statistic xi - xj
Hypotheses H 0 : i j
H a : i j
Test Statistic xi x j
Rejection Rule
Reject H0 if xi x j > LSD
where
LSD t /2 MSE( 1 n 1 n )
i j
© 2009 Cengage South-Western. All Rights Reserved Slide 41
Fisher’s LSD Procedure
Based on the Test Statistic xi - xj
Example: Reed Manufacturing
Recall that Janet Reed wants to know if there is any
significant difference in the mean number of hours
worked per week for the department managers at her
three manufacturing plants.
Analysis of variance has provided statistical
evidence to reject the null hypothesis of equal
population means. Fisher’s least significant difference
(LSD) procedure can be used to determine where the
differences occur.
© 2009 Cengage South-Western. All Rights Reserved Slide 42
Fisher’s LSD Procedure
Based on the Test Statistic xi - xj
For = .05 and nT - k = 15 – 3 = 12
degrees of freedom, t.025 = 2.179
LSD t /2 MSE( 1 n 1 n )
i j
LSD 2. 179 25. 667 ( 1 5 1 5 ) 6. 98
MSE value was
computed earlier
© 2009 Cengage South-Western. All Rights Reserved Slide 43
Fisher’s LSD Procedure
Based on the Test Statistic xi - xj
LSD for Plants 1 and 2
• Hypotheses (A) H 0 : 1 2
H a : 1 2
• Rejection Rule
Reject H0 if x1 x2 > 6.98
• Test Statistic
x1 x 2 = |55 68| = 13
• Conclusion
The mean number of hours worked at Plant 1 is
not equal to the mean number worked at Plant 2.
© 2009 Cengage South-Western. All Rights Reserved Slide 44
Fisher’s LSD Procedure
Based on the Test Statistic xi - xj
LSD for Plants 1 and 3
• Hypotheses (B) H 0 : 1 3
H a : 1 3
• Rejection Rule
Reject H0 if x1 x3 > 6.98
• Test Statistic
x1 x3 = |55 57| = 2
• Conclusion
There is no significant difference between the mean
number of hours worked at Plant 1 and the mean
number of hours worked at Plant 3.
© 2009 Cengage South-Western. All Rights Reserved Slide 45
Fisher’s LSD Procedure
Based on the Test Statistic xi - xj
LSD for Plants 2 and 3
• Hypotheses (C) H 0 : 2 3
H a : 2 3
• Rejection Rule
Reject H0 if x2 x3 > 6.98
• Test Statistic
x2 x3 = |68 57| = 11
• Conclusion
The mean number of hours worked at Plant 2 is
not equal to the mean number worked at Plant 3.
© 2009 Cengage South-Western. All Rights Reserved Slide 46
Type I Error Rates
The comparison-wise Type I error rate indicates
the level of significance associated with a single
pairwise comparison.
The experiment-wise Type I error rate EW is the
probability of making a Type I error on at least one of
the (k – 1)! pairwise comparisons.
EW = 1 – (1 – )(k – 1)!
The experiment-wise Type I error rate gets larger for
problems with more populations (larger k).
© 2009 Cengage South-Western. All Rights Reserved Slide 47
End of Chapter 13, Part A
© 2009 Cengage South-Western. All Rights Reserved Slide 48