Chapter 16

 Define a nonparametric test and when it is applied

 Conduct the sign test for dependent samples using the binomial and
standard normal distributions as the test statistics.
 Conduct a test of hypothesis for dependent samples using the Wilcoxon
signed-rank test.
 Conduct and interpret the Wilcoxon rank-sum test for independent
samples.
 Compute and interpret Spearman’s coefficient of rank correlation.
 Conduct a test of hypothesis to determine whether the correlation
among the ranks in the population is different from zero.
 No assumption requirement on the shape of the population
distribution
 Sometimes referred to as distribution free tests

 Require that responses be ranked or ordered

 Responses must be ordinal, interval or ratio scale (chap 18)

Procedure to conduct the test:
 Determine the sign (+ or -) of the
difference between pairs.
 Determine the number of usable
pairs.
 Compare the number of positive
(or negative) differences to the
critical value.
 n is the number of usable pairs
(without ties), X is the number of
pluses or minuses, and the
binomial probability π = .5
The director of Samuelson Chemicals recommended training program for
managers to improve the knowledge of database usage. A sample of 15 managers
was selected at random. A panel of database experts determined the managers
competence as being either outstanding, excellent, good, fair, or poor. After the
three-month training program, the same panel of experts rated each manager
again. The two ratings (before and after) are shown along with the sign of the
difference.
A “+” sign indicates improvement, and a “-” sign indicates that the manager’s
competence using databases had declined after the training program.
Did the training program effectively increase the competence of the managers?
Step 1: State the Null and Alternative Hypotheses

H0: π ≤.5 (There is no increase in competence as a result of the in-

plant training program.)
H1: π >.5 (There is an increase in competence as a result of the in-
plant training program.)

Step 2: Select a level of significance.

We chose the .10 level.
Step 3: Decide on the test statistic.
It is the number of plus signs resulting from the
experiment.
In preparing the data for the Sign Test, note that any paired
observation with no difference is dropped from the analysis.
Consequently, there are 14 managers in the sample.

Step 4: Formulate a decision rule.

 LO16-1

Step 4: Formulate a decision rule. Based on a binomial

distribution with 14 trials and  = .5, the upper, one-tail rejection
region with a probability that does not exceed 0.10 is shown
below. So, the decision rule is: reject the null hypothesis if the
number of “+”s is 10 or more.

Critical Rejection region: If

the number of “+”s
exceeds 10, then reject
the null hypothesis.
Step 5: Make a decision
regarding the null hypothesis.

Eleven out of the 14 managers in

the training course increased
their database competency. The
number 11 is in the rejection
region, which starts at 10, so the
null hypothesis is rejected.

We conclude that the three-

month training course was
effective. It increased the
database competency of the
managers.
 If the number of observations in the sample is larger than 10, the
normal distribution can be used to approximate the binomial. Note
that the addition or subtraction to the values of x compensates for
using the normal approximation to the binomial.

10
The market research department of Cola, Inc., has been given the
assignment of testing a new soft drink. Two versions of the drink are
considered—a rather sweet drink and a somewhat bitter one. A
preference test is to be conducted consisting of a sample of 64
consumers. Each consumer will taste both the sweet cola (labeled A) and
the bitter one (labeled B) and indicate a preference.
Conduct a test of hypothesis to determine if there is a difference in the
preference for the sweet and bitter tastes. Use the .05 significance level.
Step 1: State the null hypothesis and the alternate hypothesis.
H0: π = .50 There is no preference
H1: π ≠ .50 There is a preference

Step 2: Select the level of significance.

α = 0.05 as stated in the problem

Step 3: Select the test statistic.

Use Z-distribution
where µ=n π= 0.50n and σ = 0.50 n
 Step 4: Formulate the decision rule.
Referring to Appendix B.1, Areas under the Normal Curve, for a two-tailed test
(because states that π ≠ .50) and the .05 significance level, the critical values are
-1.96 and +1.96.

Step 5: Compute z, compare the computed value with the critical value, and
make a decision regarding H0
Note: There are 42 pluses. Since 42 is more than n/2 =64/2=32, we use formula
(18–2) for z:

( X  .50 )  .50n ( 42  .50 )  .50( 64 )

z   2.38
.50 n 0.50 64

The computed z of 2.38 is beyond the critical value of 1.96.

Conclusion: The null hypothesis of no difference is rejected at the .05 significance level.
There is evidence of a difference in consumer preference. That is, we conclude
consumers prefer one cola over another.
18-13
Use if the assumption of
normality is violated for the
paired-t test,
• Requires the ordinal scale of
measurement.
• Observations must be
related or dependent.
The steps for the test are:
1. Compute the differences between related
observations, drop observations with 0 difference
from the sample.
2. Rank the absolute differences from low to high.
3. Return the signs to the ranks and sum positive
and negative ranks.
4. Compare the smaller of the two rank sums with
the T value, obtained from Appendix B.7.
Fricker’s restaurant offers a full dinner
menu. Recently, the owner developed a
new spicy flavor for chicken. Before
replacing the current flavor, he wants to
conduct some tests.
A random sample of 15 customers is given
a piece of the current chicken and asked to
rate its overall taste on a scale of 1 to 20.
Next, the same 15 participants are given
the new chicken with the spicier flavor and
again asked to rate its taste on a scale of 1
to 20.
The results are reported in the table on the
right. Is it reasonable to conclude that the
spicy flavor is preferred? Use the .05
significance level.
Step1: State the Hypotheses:
H0: There is no difference in the ratings of the two flavors.
H1: The spicy ratings are higher.

Step 2: Select the Level of Significance

It is 0.05

Step 3: Select the Test Statistic

It is the T

Step 4: State the Decision Rule

Reject H0 if computed T < critical T
where: computed T is the smaller of the two rank sums
Step 4: Formulate the Decision Rule – Finding the critical T
 The critical values for the Wilcoxon signed-rank test are located in Appendix B.7. A
portion of that table is shown on the table below.
Step 5: Compute the Test Statistic and Make a Decision

The smaller of the two rank sums is used

as the test statistic and referred to as T.
 Recall the Decision Rule
 Reject Ho if Computed T < Critical T
 Computed T of 30 > Critical T of 25
 Decision: Do not to reject the null hypothesis.
 Conclude: We cannot conclude there is a difference in
the flavor ratings between the current and the spicy.
Stay with the current flavor.
Used to determine if two independent samples
came from the same or equal populations.
• No assumption about the shape of the population is
required.
• The data must be at least ordinal scale.
• Each sample must contain at least eight observations.
 The Wilcoxon rank-sum test is based on the sum of ranks. The data
are ranked as if the observations were part of a single sample.
 The sum of ranks for each of the two samples is determined
 If the null hypothesis is true, then the ranks will be about evenly
distributed between the two samples, and the sum of the ranks for
the two samples will be about the same.
Dan Thompson, the president of CEO Airlines,
recently noted an increase in the number of
no-shows for flights out of Atlanta. He is
particularly interested in determining whether
there are more no-shows for flights that
originate from Atlanta compared with flights
leaving Chicago. A sample of nine flights from
Atlanta and eight from Chicago are reported
on table.

At the .05 significance level, can we conclude

that there are more no-shows for the flights
originating in Atlanta?
Mr. Thompson believes there are more no-shows for Atlanta
flights. Thus, a one tailed test is appropriate, with the rejection
region located in the upper tail.

Hypothesis:
H0: The population distribution of no-shows is the same or less for Atlanta
and Chicago.
H1: The population distribution of no-shows is larger for
Atlanta than for Chicago.

Decision Rule:
Reject H0 if: computed Z > critical Z
.05 level of significance = 1.65 critical Z

18-24
 Rank the observations
from both samples as if
they were a single
group.
 The Chicago flight with
only 8 no-shows had
the fewest, so it is
assigned a rank of 1.
The Chicago flight with
9 no-shows is ranked 2,
and so on.
 The value of W is calculated for the Atlanta group and is
found to be 96.5, which is the sum of the ranks for the
no-shows for the Atlanta flights.

The computed z value (1.49) is less than 1.65, the null hypothesis is not
rejected. It appears that the number of no-shows is the same in Atlanta as in
Chicago.
 Spearman’s coefficient of rank correlation reports the association
between two sets of ranked observations. The features are:
 It can range from –1.00 up to 1.00.
 It is similar to Pearson’s coefficient of correlation, but is based on
ranked data.
 It computed using the formula:
Lorrenger Plastics, Inc., recruits management trainees and each trainee is given a score,
an expression of future potential ranging from 0 to 200, by the recruiter during the on-
campus interview. An applicant hired by Lorrenger then enters an in-plant training
program. At the completion of this program the recruit is given another composite
score (0 to 100). A higher score indicates more potential. Is there an association
between the on-campus and in-plant scores? The on-campus scores and the in-plant
training scores are on the table below:
Conclusion:

The value of .785 indicates a strong positive association between the

ratings of the on-campus recruiter and the scores of the in-plant
training staff.

The graduates that received high ratings from the on-campus

recruiter also tended to be the ones that received high ratings from
the training staff.
State the Null and Alternate Hypothesis:

H0: Rank correlation in population is 0.

H1 There is a positive association among the ranks.

Determine the Significance Level and Test Statistic

For a sample of 10 or more, the significance of is determined by
computing t using the following formula. The sampling distribution of
follows the t distribution with n - 2 degrees of freedom.
H0: Rank correlation in population is 0.
H1 There is a positive association among the ranks.
Reject H0 if computed t > critical t
t .05, n-2
t .05. 12-2
1.812
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