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It is a statistical technique which allows us to study the

differences between two or more groups of objects with
respect to several variables simultaneously.

Some Applications:

i ^ending loans to a prospective clients based on their

available information
i To classify goods as good or defective ,etc.
i To classify medicines as effective and not effective.
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i The main purpose of a discriminant function analysis is to

predict group membership based on variables.

i Second purpose of DA is understanding the data set, as a

careful examination of the prediction model that can give insight
into the relationship between group membership.
 

The Discriminant function can be written as:

D1=Ȝ1 x1 +Ȝ2 x2 +Ȝ3 x3+«««+c

Where D1= Discriminant factor (Used to predict the
independent variables)
X1,x2, etc= Discriminant variable(predictor variables)
ȁ1, Ȝ2, etc= Discriminant coefficients.

similarly we can have

D2 =Ȝ1 x1 +Ȝ2 x2 +Ȝ3 x3+««« +c as another discriminant factor.
and
D*=(D1+D2)/2
where D* is the Mean discriminant factor
All the values which are more than D* go into group D1 and the one¶s
which are less than D* go into group D2.
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i To determine, amongst many ,which specific variables

account most for such intergroup differences.

i To find the linear combinations of predictor variables that

enable us to represent the groups.

i To establish procedures for assigning new observation to one

or more groups, assuming it fits into atleast one of them.
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i The following example outlines the creation of a data set

and the use of discriminant analysis.

i A director of operations has been plagued with the same

problem for months.

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i Used to summarize the number of correct and incorrect

classifications that are obtained by Discriminant function.

i Difficult to assess these costs individually

i The ratio is important to measure the cost of
misclassification
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i The weights/significance assigned to the variables are
subject to different philosophies.

i The analysis is not validated by testing their efficacy with a

fresh sample of entities.

i There are two methods of calculating DA, which are

³Classification and Predictive Analysis´, which creates a
dilemma as to which one to implement.

i To optimize DA, there are not many tools available. So the

accuracy of the obtained result is not full-proof. Hence DA
is not very widely used.
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