UNIT 10-CHAPTER-13 (TB)

ANALYSIS OF VARIANCE TECHNIQUES

RESEARCH CONCEPTS AND

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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.

RESEARCH CONCEPTS AND

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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.

RESEARCH CONCEPTS AND

 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.

RESEARCH CONCEPTS AND

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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.

RESEARCH CONCEPTS AND

 SLIDE 13-5

Completely Randomized Design in a

One-way ANOVA
 The total variation in the data set is called the total sum of
squares (TSS) and is computed as:

Where,
xij = the jth observation of the ith sample
T•• = Grand total of all the data
k = Number of treatments (samples)
n = Number of observations in each sample

RESEARCH CONCEPTS AND

 SLIDE 13-6

Completely Randomized Design in a

One-way ANOVA
 The variation between the sample means which is attributed to
specific sources or causes is referred to as the treatment sum of
squares (TrSS).

Where, Ti• = Total of observations for the ith treatment.

The variation within the sample, which is attributed to chance, is

referred to as the error sum of squares (SSE).

RESEARCH CONCEPTS AND

 SLIDE 13-7

Completely Randomized Design in a

One-way ANOVA
In order to test the null hypothesis,
H0 : μA = μB = μC = μD
against the alternative hypothesis
H1 : At least two means are not equal
(Treatment means are not equal)
The results could be summarized in the table below called One-way
ANOVA.

RESEARCH CONCEPTS AND

 SLIDE 13-8

Completely Randomized Design in a

One-way ANOVA
 For a given level of significance, α, the computed F statistic is
compared with the table value of F with k – 1 degrees of freedom
in the numerator and k (n – 1) degrees of the freedom for the
denominator. If the computed F value is greater than the
tabulated F value, the null hypothesis is rejected.

Case of Unequal Sample Size from Treatments

 If there are ni observations corresponding to ith treatment, the
computing formula for the sum of squares would look like:

RESEARCH CONCEPTS AND

 SLIDE 13-9

Completely Randomized Design in a

One-way ANOVA
SSE = TSS – TrSS

Where, N = n1 + n2 + . . . . + nk

The total number of degrees of freedom in the case is N – 1, and

the degrees of freedom are k – 1 for the treatments and N – k for
the error.

The ANOVA table can be set up with the above information and if
computed F is greater than the table value of F, null hypothesis
could be rejected.

RESEARCH CONCEPTS AND

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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.

RESEARCH CONCEPTS AND

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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.

RESEARCH CONCEPTS AND

 SLIDE 13-12

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

RESEARCH CONCEPTS AND

 SLIDE 13-13

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.

RESEARCH CONCEPTS AND

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Factorial Design
In factorial design, the dependent variable is the
interval or the ratio scale and there are two or
more independent variables which are nominal
scale.
It is possible to examine the interaction between
the variables. If there are two independent
variables, each having three cells, there would be
a total of nine interactions.
The hypothesis to be tested would be the
following:

RESEARCH CONCEPTS AND

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Factorial Design
Row-wise:
H0 : Average of rows are equal.
H1 : Average of rows are not equal
Column-wise:
H0 : Average of columns are equal.
H1 : Average of columns are not equal
Interaction:
H0 : Average of all interactions between rows and columns are
equal.
H1 : Average of all interactions between rows and columns are
not equal

RESEARCH CONCEPTS AND

 SLIDE 13-16

Factorial Design
 Total sum of squares (TSS), sum of squares due to rows (SSR)
& sum of squares due to columns (SSC) can be computed as
explained earlier. We also need to compute sum of squares due
to interaction (SSI).

• Sum of squares due to error (SSE) can be computed as :

SSE = TSS – SSR – SSC – SSI

RESEARCH CONCEPTS AND

 SLIDE 13-17

Factorial Design

The ANOVA table for factorial design can be

computed in the usual manner to test the various
hypothesis stated earlier using F statistic.

RESEARCH CONCEPTS AND

 SLIDE 13-18

Latin Square Design

The Latin square design has three important
characteristics:
1. The number of categories must be equal for the two
extraneous (control) variables.
2. The number of experimental (treatment) groups
should equal to the numbers of categories in the
control variables.
3. Each experimental (treatment) group must appear
only once in every row and column.

RESEARCH CONCEPTS AND

 SLIDE 13-19

Latin Square Design

 Assuming that we are interested in studying the impact of the
price categorized as low (A), medium (B) and high (C). Two
extraneous variables, namely, the store size and the type of
packaging, could also influence sales.
 The layout of the Latin square design for this problem could be
as shown in the table below:

RESEARCH CONCEPTS AND

 SLIDE 13-20

Latin Square Design

 The hypothesis to be tested is:

H0 : All the treatments (price levels have an equal effect on sales.

H1 : All the price levels do not have equal effect on sales.

We need to compute the following:

RESEARCH CONCEPTS AND