Analysis of Variance

Introduction to Analysis of Variance

Analysis of Variance: Testing for the Equality of
k Population Means

(Slides from “Statistics for Business and Economics “ by Anderson,

Sweeney and Williams)
© Slide 1
 Introduction to Analysis of Variance

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

© Slide 2
 Introduction to Analysis of Variance

H0: 1 = 2 = 3 = . . . = k

Ha: Not all population means are equal

Rejecting H0 means that at least two population

means have different values.

© Slide 3
 Assumptions for Analysis of Variance

For each population, the response 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.

© Slide 4
 Analysis of Variance:
Testing for the Equality of k Population Means
Between-Treatments Estimate of Population Variance
Within-Treatments Estimate of Population Variance
Comparing the Variance Estimates: The F Test
ANOVA Table

© Slide 5
 Analysis of Variance

EXAMPLE:
The following data show the time
taken in minutes by five pain
relieving drugs A, B, C,D and E to
cure the pain of 20 patients. Each
drug was taken by four patients. At
5% level of significance, test whether
there is any difference in efficacy in
the five pain relieving drugs.

© Slide 6
 Analysis of Variance

DRUGS
A B C D E
13 11 13 12 12
12 10 14 11 12
14 13 13 10 11
12 12 14 12 14

© Slide 7
 ANOVA Table

Source of Sum of Degrees of Mean

Variation Squares Freedom Squares F
Treatment SSTR k–1 MSTR MSTR/MSE
Error SSE nT – k MSE
Total SST nT - 1

SST’s degrees of freedom

(d.f.) are partitioned into
SST is partitioned
into SSTR and SSE. SSTR’s d.f. and SSE’s d.f.

© Slide 8
 ANOVA Table

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.

© Slide 9
 Test for the Equality of k Population Means

Example: Reed Manufacturing

The Director would like to know if
there is any significant difference in
the mean number of hours worked per
week for the department managers
at his three manufacturing plants

© Slide 10
 Test for the Equality of k Population Means

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 for the
previous week is shown on the next
slide.
Conduct an F test using a = .05.

© Slide 11
 Test for the Equality of k Population Means

Plant 1 Plant 2 Plant 3

Observation
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

© Slide 12
 Test for the Equality of k Population Means

◼ Critical Value Approach

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

© Slide 13
 Test for the Equality of k Population Means

◼ Critical Value Approach

2. Specify the level of significance. a = .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

© Slide 14
 Test for the Equality of k Population Means

◼ Critical Value Approach

3. Compute the value of the test statistic. (continued)

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

© Slide 15
 Test for the Equality of k Population Means

◼ ANOVA Table

Source of Sum of Degrees of Mean

Variation Squares Freedom Squares F
Treatment 490 2 245 9.55
Error 308 12 25.667
Total 798 14

© Slide 16
 A Portion of the F Table for a = 0.05

F .05, 3, 20

df1
1 2 3 4 5 6 7 8 9

df 2 1 161.45 199.50 215.71 224.58 230.16 233.99 236.77 238.88 240.54

… … … … … … … … … …

18 4.41 3.55 3.16 2.93 2.77 2.66 2.58 2.51 2.46

19 4.38 3.52 3.13 2.90 2.74 2.63 2.54 2.48 2.42
20 4.35 3.49 3.10 2.87 2.71 2.60 2.51 2.45 2.39
21 4.32 3.47 3.07 2.84 2.68 2.57 2.49 2.42 2.37

© Slide 17
 Test for the Equality of k Population Means

◼ 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
plants.

© Slide 18