Two-Way

Analysis of Variance

Chapter 11

Statistics for Managers Using Microsoft Excel®7e Copyright ©2014 Pearson Education, Inc. Chap 11-1
 Learning Objectives
In this chapter, you learn:
 How to use two-way analysis of variance and interpret the
interaction effect
 How to perform multiple comparisons in a two-way analysis of
variance

Statistics for Managers Using Microsoft Excel®7e Copyright ©2014 Pearson Education, Inc. Chap 11-2
 Factorial Design:
Two-Way ANOVA
 Examines the effect of
 Two factors of interest on the dependent
variable
 e.g., Percent carbonation and line speed on soft drink
bottling process
 Interaction between the different levels of these
two factors
 e.g., Does the effect of one particular carbonation
level depend on which level the line speed is set?

Statistics for Managers Using Microsoft Excel®7e Copyright ©2014 Pearson Education, Inc.
 Two-Way ANOVA
(continued)

 Assumptions

 Populations are normally distributed

 Populations have equal variances
 Independent random samples are
drawn

Statistics for Managers Using Microsoft Excel®7e Copyright ©2014 Pearson Education, Inc. Chap 11-4
 Two-Way ANOVA
Sources of Variation
Two Factors of interest: A and B
r = number of levels of factor A
c = number of levels of factor B
n’ = number of replications for each cell
n = total number of observations in all cells
n = (r)(c)(n’)
Xijk = value of the kth observation of level i of
factor A and level j of factor B
Statistics for Managers Using Microsoft Excel®7e Copyright ©2014 Pearson Education, Inc. Chap 11-5
 Two-Way ANOVA
Sources of Variation (continued)

SST = SSA + SSB + SSAB + SSE Degrees of

Freedom:
SSA r–1
Factor A Variation

SST SSB c–1

Factor B Variation
Total Variation
SSAB
Variation due to interaction (r – 1)(c – 1)
between A and B
n-1
SSE rc(n’ – 1)
Random variation (Error)

Statistics for Managers Using Microsoft Excel®7e Copyright ©2014 Pearson Education, Inc. Chap 11-6
 Two-Way ANOVA Equations

Total Variation: r c n
SST   ( Xijk  X) 2

i1 j1 k 1

Factor A Variation: r
SSA  cn  ( Xi..  X)
 2

i 1

Factor B Variation: c
SSB  rn ( X. j.  X)2
j1

Statistics for Managers Using Microsoft Excel®7e Copyright ©2014 Pearson Education, Inc. Chap 11-7
 Two-Way ANOVA Equations
(continued)

Interaction Variation:
r c
SSAB  n ( Xij.  Xi..  X.j.  X)2
i1 j1

Error Sum of Squares:

r c n
SSE   ( Xijk  Xij. ) 2

i 1 j1 k 1

Statistics for Managers Using Microsoft Excel®7e Copyright ©2014 Pearson Education, Inc. Chap 11-8
 Two-Way ANOVA Equations
(continued)
r c n

where:  X
i1 j 1 k 1
ijk

X  Grand Mean
c n
rcn
 X
j1 k 1
ijk

Xi..   Mean of ith level of factor A (i  1, 2, ..., r)

cn
r n

 X ijk
X. j.  i1 k 1
 Mean of jth level of factor B (j  1, 2, ..., c)
rn

Xijk
n
Xij.  
r = number of levels of factor A
 Mean of cell ij c = number of levels of factor B
k 1 n n’ = number of replications in each cell

Statistics for Managers Using Microsoft Excel®7e Copyright ©2014 Pearson Education, Inc. Chap 11-9
 Mean Square Calculations
SSA
MSA  Mean square factor A 
r 1

SSB
MSB  Mean square factor B 
c 1

SSAB
MSAB  Mean square interaction 
(r  1)(c  1)

SSE
MSE  Mean square error 
rc(n'1)
Statistics for Managers Using Microsoft Excel®7e Copyright ©2014 Pearson Education, Inc. Chap 11-10
 Two-Way ANOVA:
The F Test Statistics
F Test for Factor A Effect
H0: μ1..= μ2.. = μ3..= • • = µr..
MSA Reject H0 if
H1: Not all μi.. are equal FSTAT 
MSE FSTAT > Fα

F Test for Factor B Effect

H0: μ.1. = μ.2. = μ.3.= • • = µ.c.
MSB Reject H0 if
H1: Not all μ.j. are equal FSTAT 
MSE FSTAT > Fα

F Test for Interaction Effect

H0: the interaction of A and B is
equal to zero MSAB
FSTAT  Reject H0 if
H1: interaction of A and B is not MSE
zero FSTAT > Fα
Statistics for Managers Using Microsoft Excel®7e Copyright ©2014 Pearson Education, Inc. Chap 11-11
 Two-Way ANOVA
Summary Table
Source of Sum of Degrees of Mean
F
Variation Squares Freedom Squares

MSA MSA
Factor A SSA r–1
= SSA /(r – 1) MSE
MSB MSB
Factor B SSB c–1
= SSB /(c – 1) MSE

AB MSAB MSAB
SSAB (r – 1)(c – 1)
(Interaction) = SSAB / (r – 1)(c – 1) MSE

MSE =
Error SSE rc(n’ – 1)
SSE/rc(n’ – 1)
Total SST n–1

Statistics for Managers Using Microsoft Excel®7e Copyright ©2014 Pearson Education, Inc. Chap 11-12
 Features of Two-Way ANOVA
F Test
 Degrees of freedom always add up
 n-1 = (r-1) + (c-1) + (r-1)(c-1) + rc(n’-1)
 Total = factor A + factor B + interaction + error
 The denominators of the F Test are always the
same but the numerators are different
 The sums of squares always add up
 SST = SSA + SSB + SSAB + SSE
 Total = factor A + factor B + interaction + error

Statistics for Managers Using Microsoft Excel®7e Copyright ©2014 Pearson Education, Inc. Chap 11-13
 Examples
 ## 11.15 – 11.18
 # 11.19
 # 11.20

Statistics for Managers Using Microsoft Excel®7e Copyright ©2014 Pearson Education, Inc. Chap 11-14
 Examples:
Interaction vs. No Interaction
 Interaction is present: some
 No interaction: line line segments not parallel
segments are parallel

Factor B Level 1
Mean Response

Mean Response
Factor B Level 1
Factor B Level 3

Factor B Level 2
Factor B Level 2
Factor B Level 3

Factor A Levels Factor A Levels

Statistics for Managers Using Microsoft Excel®7e Copyright ©2014 Pearson Education, Inc. Chap 11-15
 Do ACT Prep Course Type & Length
Impact Average ACT Scores
ACT Scores for Different Types and Lengths of Courses

LENGTH OF COURSE

TYPE OF COURSE Condensed Regular

Traditional 26 18 34 28

Traditional 27 24 24 21

Traditional 25 19 35 23

Traditional 21 20 31 29

Traditional 21 18 28 26

Online 27 21 24 21

Online 29 32 16 19

Online 30 20 22 19

Online 24 28 20 24

Online 30 29 23 25
Statistics for Managers Using Microsoft Excel®7e Copyright ©2014 Pearson Education, Inc. Chap 11-16
 Plotting Cell Means Shows A
Strong Interaction

Nonparallel lines indicate

the effect of condensing
the course depends on
whether the course is
taught in the traditional
classroom or by online
distance learning

The online course yields

higher scores when
condensed while the
traditional course yields
higher scores when not
condensed (regular).

Statistics for Managers Using Microsoft Excel®7e Copyright ©2014 Pearson Education, Inc. Chap 11-17
 Excel Analysis Of ACT Prep
Course Data
The interaction between course
length & type is significant
because its p-value is 0.0000.

While the p-values associated

with both course length &
course type are not significant,
because the interaction is
significant you cannot directly
conclude they have no effect.

Statistics for Managers Using Microsoft Excel®7e Copyright ©2014 Pearson Education, Inc. Chap 11-18
 What to do if interaction is present?

 When there is significant interaction, we can

collapse the data into 4 groups –
1. Traditional course condensed
2. Traditional course regular length
3. Online course condensed
4. Online course regular length

 After collapsing into four groups do a one way

ANOVA

Statistics for Managers Using Microsoft Excel®7e Copyright ©2014 Pearson Education, Inc. Chap 11-19
 Excel Analysis Of Collapsed
Data

1. Traditional regular > Traditional condensed

2. Online condensed > Traditional condensed
Group is a significant effect. 3. Traditional regular > Online regular
4. Online condensed > Online regular
p-value of 0.0003 < 0.05
If the course is take online should use the
condensed version and if the course is taken
by traditional method should use the regular.
Statistics for Managers Using Microsoft Excel®7e Copyright ©2014 Pearson Education, Inc. Chap 11-20
 Chapter Summary
In this chapter we discussed
 The two-way analysis of variance
 Examined effects of multiple factors
 Examined interaction between factors

Statistics for Managers Using Microsoft Excel®7e Copyright ©2014 Pearson Education, Inc. Chap 11-21
 Examples
 # 11.22
 ## 11.24, 11.26 (in Excel, data analysis toolpak,
choose “ANOVA: two-factor with replication”)

Statistics for Managers Using Microsoft Excel®7e Copyright ©2014 Pearson Education, Inc. Chap 11-22