1. TSR Mr$P Ghosh owns restaurant named Rasoi, which serves Indian and Chinese culsine, The restaurant ‘would choose Raso or not. The present chapter is an attempt in chis direction It attempts to answer the above questions and many more. Discriminant analysis isused to predic group membership. Thistechniquels used to casi. Individuals/objects into one ofthe alternative groupe on the basis function, whereas in case of multiple discriminant analysis, the numberof functions is one Jess than the number of groups. S® Objectives and Uses of Discriminant Analysis + Ton out wich independent variables are relatively beter in dlsriminating between groups. + To determine the statistical significance ofthe discriminant function and whether Eqlain he purpoze of Sectminant anise. + To develop the procedure for assigning new objects, fins or individuals whose profile but not the group identity are known tone ofthe two group. + Toevaluate the accuracy of classification, ie, the percentage of customers that itis able to classify correctly. Discriminant analysis canbe avery powerful technique of analysis in multiple situations. ‘Some areas in which itis extensively used areas follows: (g Seale construction: Discriminant analysis is used to identify the varlables/statements Dominant sens ig? that are discriminating and on which people with diverse views will respond diferenty, *+ What are the demographic variables on which potentially sucessful salesmen and Potentially unsuccessful salesmen difer? Discriminant Anaivels [525 the variables on which users/non-users ofa product can be determine what at ‘sre te ettrbutes that aze valued by the respondent but there is no lysis model ‘The mathematical frm of the discriminant analysis model is: "he meta of tnang hve on sur of questo win gop sumo gh i eval ft srininaat inet. ‘he mode the by cof (socalled dieimiant « Illustration of Discriminant Analysis ation and the use of the discriminant model in the case of Wo fon the possible commercial ofthefibersthat differentiate ighmessin weight 1 Lowinvestmentin conversion facies 1 Rotresstance ; overall evaluation of the yam's ‘The above sated points affect a potential buyer's overall desabiity, The ratings in Table 17.1 pertain to the product being considered and represent(Ufszs| nakeich watodoony: Concent and Cates we vermin Ana 527 il " OUP statist ion Gwe al : | Groupstatstis| | Not: inte SPSS cla net yr coed as, whereas ones coded a0. ‘TABLET Tests of equalty of group means a the standard deviations of variables lke tmay be important to mention thatthe actual size of the ample was 25, but the above foe. 18 observations reported in Table 17-1 were used fr a model estimation, and the remaining ‘observations presented in Table 17.13 were used a+ ahold-out sample for validation of the ‘Tests for differences in group means Assessing Classification Accuracy ‘The dascaion aecuaeycanbe aseted nthe flowing way: Wit ratio: our csr, the dscriminat score foreach ofthe respondent was a wee ed er ibe 171) and as aad mendone, the dscriminant ares| 532| Research Methodology: Concepts and Cases Discriminant Analysis |533) ramus 17312 category. in the se way, the second observation I assests (0 | Warvemieadm cms? mined and de docoineet model e canal Seon: || ‘hati why le method i called te leme-one-ut ft shat 2.2 ‘he second part Table 2s he els, wherein we se that 72.2 pe cent ofthe ees re cased covey The gh les an the xa! rat. Shsedon cotati eit tis expected that 722 per en ofthe aes would becmalled comely } 2 > Out-of-sample Performance | {Soman ry ow cnt anne ech es fetes caren ones cb fate were actually non-buyers, 7 of them were predicted as non-buyers. The overall classfcatory abit of the model measured by the hitratio is given es: __ No.of correct predictions itratio: "Tal number of cases {Inthis case, there were 15 correct predictions out of 1; therefor, the hit rato works ‘out tobe 83.3 percent. ‘Maximum vs proportional chance crterlon: We may ask the question about how ‘eliable is hit rato If the sample sizes were equal in both the groups the chance ‘would be 50 percent. In our case, getting 83.33 per cent accuracy appears tobe very Cymp =a? +(1-0}? ‘Where, 2=proporionofindviduas belonging to group 1. Proportional ofindivduals belonging to group 2 For 70 per cent buyers and 30 per cent non-buyers the index equals: Seo Woyusinga discriminant function, a lassification accuracy of65 percent (say) is ‘biained, the hitraio would look good compared to chance alone (058) However ‘this would not be as attractive asthe maximum chance criteria. core Is {Cross-validation: This method is known as leave-one-out classification method in Its noted that out of 4 buyers, 3 are cassifed corecly as ther discriminant ‘SPSS.Tn our example, we had 18 observations. Here, the fist observation is deleted speaer han zero Furthe, out of the &non-buyersn the hold-out samples 3 re clsaled and the discriminant model is estimated on the remaining 17 observations. Based Correctly as ther discriminant score is ess than zero, Therefore, out of 8 case (01 this discriminant model, the excluded case is predicted to belong toa specific correctly classified resulting in an out-of-sample accuracy of 75 percent,