Analysis of Variance (ANOVA)

Problems
 Problem-1
Gulfstream Aerospace Company produced three different prototypes as
candidates for mass production as the company’s newest large-cabin
business jet, the Gulfstream IV. Each of the three prototypes has
slightly different features, which may bring about differences in
performance. Therefore, as part of the decision-making process
concerning which model to produce, company engineers are interested
in determining whether the three proposed models have about the
same average flight range. Each of the models is assigned a random
choice of 10 flight routes and departure times, and the flight range on a
full standard fuel tank is measured (the planes carry additional fuel on
the test flights, to allow them to land safely at certain destination
points). Range data for the three prototypes, in nautical miles
(measured to the nearest 10 miles), are as follows.
Do all three prototypes have the same average range? Construct an
ANOVA table, and carry out the test. Explain your results
Prototype A Prototype B Prototype C
4,420 4,230 4,110
4,540 4,220 4,090
4,380 4,100 4,070
4,550 4,300 4,160
4,210 4,420 4,230
4,330 4,110 4,120
4,400 4,230 4,000
4,340 4,280 4,200
4,390 4,090 4,150
4,510 4,320 4,220
 Problem-2
In the theory of finance, a market for any asset or commodity is said to
be efficient if items of identical quality and other attributes (such as
risk, in the case of stocks) are sold at the same price. A Geneva-based
oil industry analyst wants to test the hypothesis that the spot market
for crude oil is efficient. The analyst chooses the Rotterdam oil market,
and he selects Arabian Light as the type of oil to be studied.
(Differences in location may cause price differences because of
transportation costs, and differences in the type of oil—hence, in the
quality of oil—also affect the price. Therefore, both the type and the
location must be fixed.) A random sample of eight observations from
each of four sources of the spot price of a barrel of oil during February
2007 is collected. Data, in U.S. dollars per barrel, are as follows.
Based on these data, what should the analyst conclude
about whether the market for crude oil is efficient?
 Problem-3
Research has shown that in the fast-paced world of electronics, the key
factor that separates the winners from the losers is actually how slow a
firm is in making decisions: The most successful firms take longer to
arrive at strategic decisions on product development, adopting new
technologies, or developing new products. The following values are the
number of months to arrive at a decision for firms ranked high,
medium, and low in terms of performance:
Do an ANOVA. Use level of significance=0.05.
 Problem-4
A company has three manufacturing plants, and company officials want
to determine whether there is a difference in the average age of
workers at the three locations. The following data are the ages of five
randomly selected workers at each plant. Perform a one-way ANOVA to
determine whether there is a significant difference in the mean ages of
the workers at the three plants. Use = .01 and note that the sample
sizes are equal.
 Problem-5
Compute a one-way ANOVA on the following data.

Determine the observed F-value. Compare the observed F-value

with the critical table F-value and decide whether to reject the null
hypothesis. Use = .05
 Problem-6
A milk company has four machines that fill gallon jugs with milk. The
quality control manager is interested in determining whether the
average fill for these machines is the same. The following data
represent random samples of fill measures (in quarts) for 19 jugs of
milk filled by the different machines. Use = .01 to test the hypotheses.
Discuss the business implications of your findings.
 Problem-7
That the starting salaries of new accounting graduates would differ
according to geographic regions of the United States seems logical. A
random selection of accounting firms is taken from three geographic
regions, and each is asked to state the starting salary for a new
accounting graduate who is going to work in auditing. The data
obtained follow. Use a one-way ANOVA to analyze these data. Note
that the data can be restated to make the computations more
reasonable (example: $42,500=4.25). Use a 1% level of significance.
Discuss the business implications of your findings.
 Problem-8
A management consulting company presents a three-day seminar on
project management to various clients. The seminar is basically the
same each time it is given. However, sometimes it is presented to high-
level managers, sometimes to midlevel managers, and sometimes to
low-level managers. The seminar facilitators believe evaluations of the
seminar may vary with the audience. Suppose the following data are
some randomly selected evaluation scores from different levels of
managers who attended the seminar. The ratings are on a scale from 1
to 10, with 10 being the highest. Use a one-way ANOVA to determine
whether there is a significant difference in the evaluations according to
manager level. Assume = .05. Discuss the business implications of your
findings.
 Problem-9
Family transportation costs are usually higher than most people believe
because those costs include car payments, insurance, fuel costs,
repairs, parking, and public transportation. Twenty randomly selected
families in four major cities are asked to use their records to estimate a
monthly figure for transportation cost. Use the data obtained and
ANOVA to test whether there is a significant difference in monthly
transportation costs for families living in these cities. Assume that level
of significance=0 .05. Discuss the business implications of your findings.
 Problem-10
A manufacturer of pens has hired an advertising agency to develop an
advertising campaign for the upcoming holiday season. To prepare for
this project, the research director decides to initiate a study of the
effect of advertising on product perception. An experiment is designed
to compare five different advertisements. Advertisement-A greatly
undersells the pen’s characteristics. Advertisement-B slightly undersells
the pen’s characteristics. Advertisement-C slightly oversells the pen’s
characteristics. Advertisement-D greatly oversells the pen’s
characteristics. Advertisement-E attempts to correctly state the pen’s
characteristics. A sample of 30 adult respondents, taken from a larger
focus group, is randomly assigned to the five advertisements (so that
there are 6 respondents to each).
After reading the advertisement and developing a sense of “product
expectation,” all respondents unknowingly receive the same pen to
evaluate.
The respondents are permitted to test the pen and the plausibility of
the advertising copy. The respondents are then asked to rate the pen
from 1 to 7 (lowest to highest) on the product characteristic scales of
appearance, durability, and writing performance. The combined scores
of three ratings (appearance, durability, and writing performance) for
the 30 respondents are as follows
At the 0.05 level of significance, is there evidence of a
difference in the mean rating of the pens following exposure
to five advertisements? If appropriate, determine which
advertisements differ in mean ratings.