ANALYSIS OF VARIANCE TECHNIQUES

Dr. Supriti Mishra

 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.
 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.
 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.
 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.
 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.
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.
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.
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.
 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:
 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

The ANOVA table for factorial design can be computed in the usual manner to
test the various hypothesis stated earlier using F statistic.