Part II

One Way-ANOVA

Second, use MINITAB

One-Way ANOVA

Individual Statistics and Confidence Intervals

In the following we explain how one can read the results he /she may

get from the MINITAB.

When you use the one-way ANOVA for your data which consists of four

levels (groups) named Blend 1, Blend 2, Blend 3 and Blend 4, you will get

the following result:

The following are the descriptions of the results shown above.

Individual statistics
Use the table of individual statistics to assess the following properties

of your data:

· N. The number of observations included for each level of the

factor.

· Mean. The mean of the observations for each level. These sample

means provide an estimate of the population means for each level.

· StDev. The sample standard deviations for each level. Analysis of

variance assumes that the population standard deviations for all levels

are equal. Thus, if the sample standard deviations differ by a lot, you

might want to test the data for equality of variances using the test for

equal variances command.

· Pooled StDev. The pooled standard deviation is an estimate of the

common standard deviation for all levels.

The results of the paint hardness analysis indicate that:

· Blend 2 has the lowest mean hardness (8.567) and Blend 4 has the

highest (18.067).

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· The standard deviations for the different blends do not appear to

vary enough from each other to be cause for concern.

The pooled standard deviation is 3.950.

Individual confidence intervals

MINITAB presents 95% confidence intervals for each level of the factor.

When the p-value in the analysis of variance table indicates there is a

difference among the factor level means, you can use the table of individual

confidence intervals to explore the differences:

· Each asterisk represents a sample mean.

· Each set of parentheses encloses a 95% confidence interval for the

mean of a population. You can be 95% confident that the population mean for

each level is within the corresponding interval.

· If the intervals for two means do not overlap, it suggests that the

population means are different. You should interpret these intervals with
caution, however, since your rate of type I error increases when making

multiple comparisons. Thus, when making multiple comparisons, you should use

one of the four available methods for controlling the rate of type I error.

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In the paint hardness results, the intervals for the means of Blend 2 and

Blend 4 do not overlap. This suggests that the population means for these

levels are different.

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 Case study

Suppose that the financial analyst wishes to compare the mean earnings per

share of three types of non-industrial business of companies: commercial

banks, retailers, and utilities.

The following table shows the data collected from these three non-industrial

business companies.

Table 3.1 Data from non-industrial business companies

Commercial banks Retailers Utilities

6.42 3.52 3.55

2.83 4.21 2.13
8.94 4.36 3.24
6.80 2.67 6.47
5.70 3.49 3.06
4.65 4.68 1.80
6.20 3.30 5.29
2.71 2.68 2.96
8.34 7.25 2.90
0.16 1.73

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 Answer:

Now, use MINITAB

Do the following steps

1. Put the data in columns C1-c3

2. Name these columns as 'Comercial banks', 'Retailers' and 'Utility',

respectively.

3. Type the following command

MTB > AOVOneway 'Comercial banks' 'Retailers' 'Utility'.

You will get the following results

One-way ANOVA: Comercial banks; Retailers; Utility

Source DF SS MS F P
Factor 2 35.40 17.70 5.28 0.012
Error 26 87.11 3.35
Total 28 122.51

S = 1.830 R-Sq = 28.89% R-Sq(adj) = 23.42%

Individual 95% CIs For Mean Based on

Pooled StDev
Level N Mean StDev ------+---------+---------+---------+---
Comercial banks 9 5.843 2.166 (-------*-------)
Retailers 10 3.632 1.798 (-------*-------)
Utility 10 3.313 1.509 (-------*-------)
------+---------+---------+---------+---
3.0 4.5 6.0 7.5

Pooled StDev = 1.830

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 The decision

Since the F =5.28 exceeds F1− α ; c−1,n−c = F0.95; 2 ,26 = 3.37 , the financial
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analyst may reject H0 at the 0.05 level and conclude that the means of the

earnings per share of three types of non-industrial business of companies:

commercial banks, retailers, and utilities are not all equal.

In fact, the P-value “the probability of obtaining such a result as 5.28 or one

even more extreme when H0 is true” is 0.012. Since this P-value is less than
0.05, then the financial analyst may reject H0 at the 0.05 level.

Also, the 95% confidence intervals of the means of Comercial banks and

Utility do not overlap, This suggests that the financial analyst may reject H0

at the 0.05 level