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    ANOVA in Megastat

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    Part A: (Analysis of Variance: One-Way; Use F-test)

    A real estate developer is considering investing in a shopping mall on the outskirts of Atlanta, Georgia. Three parcels of land are being evaluated. Of particular importance is the income in the area surrounding the proposed mall? A random sample of four families is selected near each proposed mall. Following are the sample results.

    Southwyck Area Franklin Park Old Orchard
    . ($000) ($000) ($000) .
    64 74 75
    68 71 80
    70 69 76
    60 70 78

    The output from MegaStat package is given below:

    ANOVA table
    Source SS df MS F p-value
    Treatment 276.50 2 138.250 14.18 .0017
    Error 87.75 9 9.750
    Total 364.25 11

    At the 0.05 significance level, can the developer conclude there is a significance difference in the mean income?

    Step 1) State the null and alternative hypothesis, expressing it in words, and using symbols.

    In words:

    Using Symbols:

    Step 2) State the decision rule (region or regions that null hypothesis will be rejected). (At and the appropriate degrees of freedom, the required critical value should be found, using Appendix G)

    Step 3) Show the test statistic, and the p-value. [Use the above MegaStat output]

    Step 4) Make decision, either based on comparing the test statistic and the critical value of the test, or the p-value and the level of significance of the test.

    Step 5) Interpret the results (conclusion.)

    Part B: How should Analysis of Variance be used to make strategic decisions in a dynamic, competitive business environment? In what situations does your organization use Analysis of Variance? What are some examples that you are familiar with, or where ANOVA should be used?

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    Solution Summary

    The solution gives the details of analysis of variance using the megastat. Null hypothesis, alternative hypothesis, significance level, critical Value, test statistic and P value are given.

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