Analyze Module: Lesson Overview

The tools and objectives of the Analyze phase are shown in the image below.

Exploratory Data Analysis: Learning Objectives

At the end of this Analyze topic, all learners will be able to: create and interpret multi-vari studies to interpret the difference between positional, cyclical, and temporal variation; apply sampling plans to investigate the largest sources of variation. interpret the correlation coefficient and determine its statistical significance (p-value); recognize the difference between correlation and causation. interpret the linear regression equation and determine its statistical significance (p-value). use regression models for estimation and prediction.

Multi-vari Studies
Data can be grouped in terms of sources of variation to help define the way measurements are partitioned. These sources describe characteristics of populations, and the following are common types that describe our everyday processes: Classifications (by category) Geography (of a distribution center or a plant) Geometry (chapters of a book or locations within buildings) People (tenure, job function, or education) Time (deadlines, cycle time, or delivery time)

We can stratify the data to help us understand the way our processes work by categorizing the individual measurements. This helps us understand the variation of the components as it relates to the whole process. For example, errors are being tracked in a process. The variation could be within a subgroup (within a certain batch), between subgroups (from one batch to another batch) or over time (time of day, day of week, shift or even season of the year).

Multi-vari Charts
A multi-vari chart is a tool that graphically displays patterns of variation, and the stability or consistency of a process. It is used to identify possible Xs or families of variation in the preliminary stages of data analysis. Multi-vari charts categorize data as positional (within a subgroup), cyclical (between subgroups), and temporal(over time). You can also detect differences in the inputs (Xs) by using two diagrams presented in the Measure lesson of this course: boxplots (e.g., box-and-whisker plots) when the Y is continuous and the Xs are discrete scatterplots (e.g., scatter diagrams) when the Y is continuous and the Xs are also continuous

Scatterplot Question
Cyclical Variation The number of errors produced (Y) is plotted on the y axis, and the years of experience of operator (X) are plotted on the x axis.

Q.Istherearelationshipbetweenthenumberoferrorsproducedandyearsofoperatorexperience? a. b. c. d. Norelationship Moderatelinearrelationship Strongpositivelinearrelationship Strongnegativelinearrelationship

Multi-vari Sampling

Multi-vari analysis uses sources of variation to stratify the data to begin to turn the possible Xs into the probable Xs. Multi-vari analysis helps narrow the focus and serves as a point where we begin to gather samples to determine if the probable Xs are statistically significant. A sampling plan is critical in investigating the largest sources of variation. Sampling plans should be designed in such a way that the resulting data will contain a representative sample of the parameters of interest.

Answer: D

Multi-vari Sampling Steps

See below to learn more about multi-vari sampling.

1. Select the process and variables to analyze.

Reducing the return mail volume is a project of interest for process improvement. Reducing the return mail volume by 50% will increase the through-put accuracy of items mailed with correct addresses by the end of year 2006 and bring the company into compliance with USPS discount requirements. During the period between April and June 2006, the return mail volume for the Consumer Lending Department was 12,929 items representing 31.4% of the total return mail volume for the bank. Cost of poor quality (COPQ) elements have been identified as manual handling, overtime, rework, labor, equipment utilization, and postage totaling $125,693.00. The project objective is to reduce the Consumer Lending Department return mail items by 20% by the end of year 2006. The variables to be analyzed are: Time Day of the week: Does the day of the week make a difference? Week of the month: Does the week of the month make a difference? Classification Product type: Does the product type make a difference, such as a lease, auto loan, home equity loan, etc? Geography Physical location: Does the building location make a difference?

2. Select the sample size and duration. 3. Record observation information.

The sample size required to be statistically significant with alpha = 0.05 and a target power of 0.90 = 10. Based on the sample size necessary to achieve the desired level of significance, data were tracked for one week, using check sheets to be completed by mailroom staff, to track the respective variable information by shift.

4. Plot the data points.

Create a boxplot for interpretation

5. Analyze the graph for variation.

The variances of building A and B appear to be different.

6. Conduct further analysis.

Additional analysis on the buildings will be conducted to find out why the return mail volumes are different.

7. Repeat multi-vari studies.

One month has passed, and improvements have been implemented. Shown below are boxplots reflecting return mail volume for buildings A and B. Based on these graphs, the variances of building A and B are roughly the same.

Regression and Correlation Introduction

In quality improvement projects where the input and output variables are both continuous, quality professionals want to understand if there is a relationship between the two variables. Correlation and regression are two statistical tools that determine whether a relationship exists between two groups. If related, then the question revolves around the relationships strength. Correlation measures the strength of the relationship and implies that a change in one variable also changes the other. On the other hand, regressionprovides a prediction model for the relationship and determines the significance of the factors involved.

Correlation Coefficient
Correlation does not imply causation. Do not assume that a scatter plot pattern means the two variables are related. It is likely that there is a correlation, but possibly not causation. The correlation tool does not establish causation. Relationships over a wider range of data or a different portion of the range of data may exist. For example, there is a strong association between increased income and age or seniority. But you may not automatically assume that your income will increase because you are older, or because you have more experience or seniority.

Thecorrelationcoefficientrangesfrom1r1,anddetermineswhetherthereisapositiveornegative correlationintheregressionanalysis,wherethereisthecorrelationcoefficientandanestimateof (rho),thepopulationparameter.

Correlation Key Points

The following are key points about the correlation coefficient r: Description Correlation coefficient range Positive values Perfect positive correlation Negative values Perfect negative correlation Moderate correlation Strong correlation No linear correlation -1 r 1 +r occurs when the value of one variable increases and the other variable increases r = +1 -r occurs when the value of one variable increases and the other variable decreases r = -1 Typically when values of r range from 0.3 to 0.7 or from -0.7 to -0.3 Typically when values of r range from 0.7 to 1 or from -1 to -0.7 r=0 Value

Correlation Example Data Table

Step 1: Calculate the sums. To check your answer, see below. Change Requests (X) 1 4 5 6 Sum Step 2: Calculate the coefficient correlation (r). To check your work, scroll down. Cost per Transaction (Y) 0.35 0.39 0.40 0.41 X2 Y2 (X)(Y)

Table
Change Requests (X) 1 4 5 6 Sum 16 Cost per Transaction (Y) 0.35 0.39 0.40 0.41 1.55 X2 Y2 1 0.1225 0.35 2 16 0.1521 1.56 25 0.16 36 0.1681 2.46 78 0.6027 6.37

(X)(Y)

Calculation:

Variables and Relationships

Regression is the analysis of relationships between variables. In regression, the relationships of the variables are expressed in the form of an equation. This equation allows for the prediction of the dependent variable (Y) from one or more independent variables (X). A variable is a quantity able to assume different numerical values. The graph displays the mathematical relationship between two variables: dependent and independent. The independent variable X is the input that can be set directly to achieve a result. In other words, the operator controls the independent variable. Setting the temperature, pressure, and rate are examples of controllable factors.

Variables and Relationships-Coefficients

Coefficients are those expressions in the equation that define the mathematical relationship between the independent and dependent variables. For example, b0 and b1 are the coefficients in the expression y = b0 + b1x. This is the equation for simple linear regression. The coefficients are linear and x may be of order one or more. Two Types of Coefficients: The intercept is the value of y when x is zero. It is denoted as the estimate b0. The population parameter for the intercept is 0 . The slope is the amount of increase (or decrease) in y (rise) over a specific increase in x (run). This is denoted as the estimate b1. The population parameter for the slope is 1 .

Simple Linear Regression Equation

For the purpose of this course, the prediction equation for simple linear regression is calculated starting with the mathematical equation for a straight line: Y= b0 + b1X where: Y-is the predicted value of the population parameter Y from the sample X, Y data pairs b0 is the Y intercept that is, the value of Y when X = 0 b1 is the slope of the line, that is, rise (change in Y) over run (change in X)

Also, the residual for each predicted value of Y is defined as the difference between the predicted value and the actual value at X. Assumptions The residuals are normally distributed with a mean of zero and a standard deviation of one. The y-values are independent.

Method of Least Squares

The method of least squares is a statistical procedure that finds the best-fit line that minimizes the sum of squares of the observed values of Y deviations from those predicted. This method formalizes the scatter plot or fitted line plot procedure when plotting (X) and (Y) data on a graph. After plotting the data, use a ruler to pass through the majority of the points providing the best-fit line. The data are evaluated against the line to see obvious deviations of the data from the line.

Least square estimator equations

Least Squares Example

For example, a jewelry store wants to ascertain the relationship between the number of watch repairs and the amount of time required to repair them. In the image below, Which one is bes fit A, or B or C?

OptionAOptionBOptionC Answer:OptionC
Given a series of values for an independent variable x and the corresponding dependent variable y, we can calculate the estimates of B0 and B1 (which are again the values b0 and b1 respectively). Find the fitted regression line for the following set of data, where x is the independent variable and y is the dependent variable. X Y 3 5 7 9 11 7 9 16 18 23

Simple Linear Regression Problem

Calculation/Prediction/Results
Determine the necessary calculations for b1 and b0:

Predict y for a given value of x using the equation for a straight line.

The final fitted regression line for this data set is:

Practice Problem
The customer change request process within the corporate account department is a project of interest for process improvement. The department manager wants to find the relationship between the number of change requests processed per month and the cost per transaction.

Change Requests (X) 1 4 5 6

Cost per Transaction (Y) .35 .39 .40 .41

X2 1

Y2 .1225

(X) (Y) .35 1.56 2.00 2.46

16 .1521 25 .1600 36 .1681

Sum x,y

16 4

1.55 0.3875

78 0.6027 6.37

Calculation: (Solution)

Prediction To predict Y from a given value of X, use the prediction equation: Y-hat = b0 + b1X = 0.3389 + 0.0212X Results Using the equation, we can predict the cost per transaction based on the number of customer change requests. If there are two customer change requests, the cost per transaction is 0.3389 + (0.0121) (2) = 0.363 or approximately $0.36.

Simple Linear Regression Tips

Using the regression equation to predict a value of the dependent variable outside the range of the independent variable is not recommended since you have no evidence that the same linear relationship exists outside the observed range. For example, think about the relationship between a persons height to age. Early on, it would seem that as age increases, so does height. Using that data to predict height past the age of 16 would indicate that the person would be 10 feet tall at some point! Many different relationships between X and Y can yield similar mathematical results. Plot the data using a statistical software program such as Minitab before interpreting any regression statistics.

Hypothesis Testing: Learning Objectives

At the end of this Analyze topic, all learners will be able to: define and distinguish between statistical and practical significance, and apply tests for significance level, power, type I and type II errors. determine appropriate sample size for various tests. define, compare, and contrast statistical and practical significance. define and describe paired-comparison parametric hypothesis tests. define terms related to one-way ANOVAs, and interpret their results and data plots. define and interpret Chi-square, and use it to determine statistical significance.

Hypothesis Testing Terms

A hypothesis is a theory about the relationships between variables. Statistical analysis is used to determine if the observed differences between two or more samples are due to random chance or to true differences in the samples. A null hypothesis assumes no difference exists between or among the parameters being tested and is often the opposite of what is hoped to be proven through the testing. The null hypothesis is typically represented by the symbol Ho. Example: Ho: 1 = 2 An alternate hypothesis assumes that at least one difference exists between or among the parameters being tested. This hypothesis is typically represented by the symbol Ha. Examples:
Ha: 1 < 2 Ha: 1 > 2 Ha: 1 2

In hypothesis testing, the phrase to accept the null hypothesis is not typically used. In statistical terms, the Certified Quality professional can reject the null hypothesis, thus accepting the alternate hypothesis, or fail to reject the null hypothesis. This phrasing is similar to a jury's statement that the defendant is not guilty, which does not say that the defendant is innocent.

General Sequencing
To achieve victory in a project, both practical and statistical improvements are required.

Hypothesis Testing Steps

The following list provides a typical step-by-step plan for performinghypothesis testing: 1. Define the practical problem. 2. Define the practical objective. 3. Establish hypotheses to answer the practical objective. 4. Select the appropriate statistical test. 5. Define the alpha () risk. 6. Define the beta () risk. 7. Establish delta (). 8. Determine the sample size (n). 9. Collect the data. 10. Conduct the statistical tests. 11. Develop statistical conclusions. 12. Determine the practical conclusions. Key Concepts Significance level Power Type I and Type II errors Sample size

Hypothesis Testing Example

Step 1: Define the practical problem. We have previously used tools such as the cause and effect diagram, process mapping, matrix diagrams, FMEA, and graphical data analysis to identify potential Xs. Now you need statistical testing to determine significance: Return mail volume is too high (Y = volume, X = division, X = product type, X = ancillary endorsement). Cost per unit is too high (Y = cost, X = system downtime, X = customer requirement changes, X = exception processing). Error rates are too high (Y = error rate, X = shift, X = product type, X = day of week).

Step 2: Define the practical objective. Define logical categorizations where differences might exist so that meaningful action can be taken. Ask questions to determine what you want to prove (i.e., what questions will the hypothesis test answer?): Are there significant differences in return mail volume between division, product types, and ancillary endorsements? Are there significant differences among the production shifts in variance of system down time? Do error rates vary by shift, product type, and day of the week?

Step 3: Establish hypotheses to answer the practical objective. The following is an example of hypotheses using an Analysis of Variance (ANOVA) test of means where the mean of each shift is equal against the alternative where they are not equal: Null Hypothesis: Ho: 1st shift = 2ndshift = 3rd shift Alternate Hypothesis: Ha: At least one mean is different Step 4: Select the appropriate statistical test. Based on the data that has been collected and the hypothesis test established to answer the practical objective, refer to the Hypothesis Testing Roadmap to select statistical tests. The roadmap is a very important tool to use with each hypothesis test.

Step 5: Define the Alpha () Risk. The Alpha Risk (i.e., Type 1 Error or Producers Risk) is the probability of rejecting the null hypothesis when it is true (i.e., rejecting a good product when it meets the acceptable quality level). Typically, () = 0.05 or 5%. This means there is a 95% (1-) probability you are failing to reject the null hypothesis when it is true (correct decision). For example, in the U.S. legal system, alpha risk is the risk an innocent person could have been convicted of a crime. Step 6: Define the Beta () Risk. The Beta Risk (i.e., Type 2 Error or Consumers Risk) is the probability of failing to reject the null hypothesis when there is significant difference (i.e., a product is passed on as meeting the acceptable quality level when in fact the product is bad). Typically, () = 0.10 or 10%. This means there is a 90% (1-) probability you are rejecting the null hypothesis when it is false (correct decision). Also, the power of the sampling plan is defined as 1 ; hence the smaller the , the larger the power. For example, in the U.S. legal system, beta risk is the risk a guilty person could have been found not guilty and been set free.

Step 7: Establish Delta (). Delta () is the practical significant difference detected in the hypothesis test between:

proportion and a target o Ho: p - po = o Ha: p - po < or Ha: p - po > or Ha: p - po two proportions o Ho: p1 - p2 = o Ha: p1 - p2 < or Ha: p1 - p2 > or Ha: p1 - p2 mean and a target o Ho: - o = o Ha: - o < or Ha: - o > or Ha: - o two means o Ho: 1 - 2 = o Ha: 1 - 2 < or Ha: 1 - 2 > or Ha: 1 - 2

Example

The return mail volume reduction of 10% has been determined to be a practical significance. An error rate difference of 7% has been determined to be of practical significance.

Example
Historically, within the XYZ Company, the average cost of a transaction is $.40 with a standard deviation of $.25. The goal of the project is to reduce the average cost to $.30. Assuming the alpha risk of 5% and a beta risk of 10%, how many samples would be needed? Step 8: Determine the sample size (n). Sample size depends on the statistical test, type of data and alpha and beta risks. There are statistical software packages to calculate sample size. It is also possible to manually calculate sample sizes using a sample size table. Calculating sample size using /: Where delta is the difference in the actual process and the project target or objective divided by the standard deviation

Step 9: Collect the data. Data collection is based on the sampling plan and method.

Step 10: Conduct the statistical tests. Use the Hypothesis Test Roadmap to lead you in the right direction for the type of data you have collected.

Step 11: Develop statistical conclusions. According to Montgomery in Introduction to Statistical Quality Control, the pvalue is the smallest level of significance that would lead to rejection of the null hypothesis (Ho). Typically, if = 0.05 and the p-value 0.05, then reject the null hypothesis and conclude that there is a significant difference. Typically, if = 0.05 and the p-value > 0.05, then fail to reject the null hypothesis and conclude that there is not a significant difference.

Example Ho: 1= 2 = 3 Ha: At least one mean is different With = 0.05 and a computed p-value of 0.00, there is a significant difference between mail endorsement classifications and return mail volume. Therefore, we reject the null hypothesis.

Ho: p1 = p2 = p3 Ha: At least one pi is different With = 0.05 and a computed p-value of 0.12, there is not a significant difference between shift and account processing errors. Therefore, we fail to reject the null hypothesis.

Statistical conclusions can be made by comparing the test statistic (calculated value) to a critical value in a statistical table OR by using a statistical software program to calculate the p-value: The null hypothesis will be rejected if the absolute value of the test statistic is greater than the critical value. For example: o Reject Ho if | tcalc | > tcritical /2, n-2 o Do not reject Ho if | tcalc | < tcritical /2, n-2 If the test statistic (calculated value) = critical value, then it is often considered to be a judgment call. Possible judgment options include repeating the experiment, understanding the real criticality of the answer, etc.

Example Ho: = 0 Ha: 0 Account processing is not on target since tcalc > tcritical (4.74 > 2.262); therefore, reject the null hypothesis.

Ho: 1 = 2 Ha: 1 < 2 Since tcalc < tcritical, fail to reject the null hypothesis: -0.37 > -2.306, we cannot reject the null hypothesis.

Step 12: Determine the practical conclusions. Restate the practical conclusion to reflect the impact in terms of cost, return on investment, technical, etc. Remember, statistical significance does not imply practical significance. Example Statistically the first quarter has the worst error rate and an increased missed account rate of 9%. Through analysis, it has been determined that distribution center G reflects a decreased productivity rate compared to the other distribution centers. In addition to low productivity, there is an increase in employee turnover of 20% for second-shift employees.

Testing for Means, Variance, and Proportions

Hypothesis testing plays an important role in the Six Sigma methodology. Once you have the data collected and manipulated, you are ready to perform the tests that turn a practical problem into a statistical problem. According to Montgomery in Introduction to Statistical Quality Control, 5th Edition, The pvalue is the smallest level of significance that would lead to rejection of the null hypothesis (Ho). For statistical tests: Choose appropriate risk, generally 0.05 (95% confidence level). Verify correct sample size. Typically, if = 0.05 and the p-value 0.05 (test value falling in the reject region), then reject the Ho(Null) hypothesis. Typically, if = 0.05 and the p-value > 0.05 (test value not in the reject region), then fail to reject the Ho(Null) hypothesis.

The following hypothesis test summary displays the test statistic, statistical tests, and null and alternate hypotheses for means, variances, and proportions.

Test for Means Introduction

The statistical tests for means that a Quantity Professional would commonly use are: One-sample Z-test: for population mean Two-sample Z-test: for population mean One-sample T-test: single mean (one sample vs. historic mean or target value) Two-sample T-test: multiple means (sample from each of the two

categories) ANOVA (Analysis of Variance) (sample from three or more categories)

An example of the One-sample Z-test for population mean, Twosample Z-test for population mean, One-sample T-test, and the Twosample T-test will be shown in this sub-topic. One-way ANOVA and Twoway ANOVA will be discussed later under the specific sub-topic of ANOVA.

One Sample Z-Test for Population Mean

The One-sample Z-test is used when a large sample (n 30) is taken from a normal population and we want to compare the mean of the population to some claimed value or for n < 30 if the population variance is assumed known. This test assumes the population standard deviation is known or can be reasonably estimated by the sample standard deviation and uses the Z distribution. Null hypothesis Ho: = 0 where 0 is the claim value compared to the sample. Alternative hypothesis may take one of these forms: Ha: 0 Ha: < 0 Ha: > 0

Test Statistic
Where: x is the sample mean. can be estimated by s for the sample. n is the sample size.

For Alternate Hypothesis

Ha: 0

Reject Ho if:
z < -z /2 or z > z /2

Ha: < 0

z < -z

Ha: > 0

z > z

For Example:
A weight loss company is introducing a new marketing campaign and wishes to include in the advertisement that the average weight loss of a participant is five pounds per month. An associate from the marketing department randomly chooses 75 participant files and finds the sample has an average weight loss of 4.4 pounds per month. Suppose the standard deviation of the population is 0.2. Is the claim of five pounds lost per month valid? The marketing department wants a 95% confidence level in the claim.
Step 1: Establish the hypotheses. Ho: = 5.0 [The claim is 5.0 pounds or more, since this is a weight-loss program.] Ha: < 5.0 (left-tail test) H1 < 5.0 Step 2: Calculate the test statistic.

Step 3: Determine critical value. Use the entire standard normal distribution. The alternative distribution is going to be on the left side of the null distribution, so we put the entire alpha-risk in the left tail of the null distribution, and find the ordinate which cuts off 0.05. On the Standard Normal Distribution Table, this is -1.645, which is an interpolation between -1.64 and -1.65. Step 4: Draw the statistical conclusion. Here are the distributions plotted in actual units, not z-scores. The advertised weight loss has a mean of 5.0 and a standard error of the mean of 0.0239. The actual weight loss has a mean of 4.4 and the same standard error of the mean. The critical region in the null distribution (advertised weight loss) of 0.05 in the left tail is cut off by an ordinate of 4.9620. If the mean of the alternative distribution (actual weight loss) is equal to or greater than 4.9620, then we fail to reject the null hypothesis. However, this is not the case. The mean of the null distribution is 4.4. The probability that it is in the null distribution is less than 0.05 the infamous p-value. If we convert 4.9620 to a z-score, we have (4.9620 5.000) / (0.0239) or -1.645. This is the value of the ordinate that cuts off 0.05 in the left tail of the standard normal distribution.

Two-Sample Z-Test for Population Mean

The two-sample Z-test for population mean is used after taking two large samples (n 30) from two different populations in order to compare them. This test uses the Z-table, and assumes knowing the population standard deviation, or is estimated by using the sample standard deviation. Click the information below to learn more.

The steps in completing a two-sample Z-test are the same as the onesample Z-test, but with the appropriate calculation for the test statistic.

Hypotheses
Null hypothesis: Ho: 1= 2 Alternative hypothesis may take one of these forms: Ha: 1 2 Ha: 1 < 2 Ha: 1 > 2

Test Statistic
Where:

x1 and x2 are the sample means. s1 and s2 are the sample standard deviations. n1and n2 are the sample sizes.

Critical Values/Reject Regions

For Alternative Hypothesis: Ha: 1 2 Ha: 1 < 2 Ha: 1> 2 z < -z z > z Reject Ho if: z < -z/2 or z > z/2

One Sample T-Test

The One-sample T-test is used when a small sample (n < 30) is taken from a population and you want to compare the mean of the population to some claimed value. This test assumes the population standard deviation is unknown and uses the t distribution. Null hypothesis Ho: = 0 Where: 0 is the claim value compared to the sample.

Alternative hypothesis (may take one of these forms) Ha: 0 Ha: < 0 Ha: > 0

Test Statistic
Where: x is the sample mean. s is the sample standard deviation. n is the sample size.

For Alternate Hypothesis

Ha: 0

Reject Ho if:
t < -t /2, n-1 or t > t /2, n-1

Ha: < 0

t < -t, n-1

Ha: > 0

t > t, n-1

Where: t values have n - 1 degrees of freedom.

For Example: The Loan Reconciliation Department is reviewing the outstanding general ledger items process to determine if it is on target. The mean balance on an outstanding general ledger item is $5,500 (target value). A sample of 10 outstanding general ledger items was reviewed, reflecting a mean item balance of $5,506 with a standard deviation of $4. Is the process on target? The significance level = 0.05.
Step 1: Establish the hypotheses. Ho: = 5,500 Ha: 5,500 Step 2: Calculate the test statistic.

Step 3: Determine the critical values. The sample size was 10, so df is n -1 or 9. Look at the t.025column (/2) and 9 df. The critical value is 2.262.

Step 4: Draw the statistical conclusion. Reject Ho if tcalc < -t /2 or tcalc > t /2; otherwise, do not reject Ho.

Since tcalc > tcritical, reject the null hypothesis: 4.74 > 2.262 Report back, No, the process is not on target.

Two Sample T-Test

The Two-sample T-test is used when two small samples (n < 30) are taken from two different populations and compared. There are two forms of this test: assumption of equal variances and assumption of unequal variances. For both assumptions of equal and unequal variances the hypotheses are: Null hypothesis Ho: 1 = 2 Alternate hypothesis Ha: 1 2 Ha: 1 < 2 Ha: 1 > 2 Degrees of Freedom Assumption of equal variances (n1 + n2) - 2 Assumption of unequal variances should be as attachment.

Test Statistic
Assumption of equal variance

where pooled variance is: Assumption of unequal variances

where:

x1 and x2 are the sample means. s1 and s2 are the sample standard deviations. n1 and n2 are the sample sizes.

Critical Values/Reject Regions

For Alternate Hypothesis

Ha: 1 2

Reject Ho if:
t < -t/2, n1+n2-2 or t > t/2, n1+n2-2

Ha: 1 < 2

t < -t, n1+n2-2

Ha: 1 > 2

t > t, n1+n2-2

Degrees of Freedom
Assumption of equal variances (n1 + n2) - 2

Assumption of unequal variances

Two Sample T-test

Step 1: Establish the hypotheses. Ho: A = B Ha: A B Step 2: Calculate the test statistic. In this example, the two populations with unknown means and unknown variances are assumed to be unequal.

Two Sample T Test Example Steps 3 and 4

Step 3: Determine the critical values.

In a two-sample t-test, degrees of freedom are calculated using the following formula:

Note: The degrees of freedom should be rounded down to be conservative. Look at the t.025 column (/2) and 7 d.f. and you will see the critical values are -2.365 and 2.365.

Hypothesis Test for Variation

Ho: 2After = 2Before Ha: 2After 2Before Ha: 2After > 2Before Ha: 2After < 2Before

Test for Variances

An example of the F-Test statistic will be shown in this course. The Bartletts Test is beyond the scope of this course. When comparing two populations means using continuous data, you must first decide if a statistical difference exists in the variances (homogeneity of variance test). The normality of the test data is important because you need to know the type of distribution to determine the type of variance test to use.

Two samples
Normal distribution F- Test

More than two samples

Bartletts Test

For Example

Two check processing centers are being evaluated to see if there is a difference in processing time. We want to know if the processing time variability is significantly different at the two centers. Sample sizes from Center 1 and Center 2 were 10 and 9, respectively, and have sample variances of S12 = 6.89 and S22 = 4.96. Given = 0.05, are the population variances different at a 95% confidence level?

Step 1: Establish the hypotheses. Ho: 21 = 22 Ha: 21 22

Step 2: Calculate the test statistic.

Step 3: Determine the critical values. F distribution tables are entered using the degrees of freedom which are designated by 1 and 2 (nu) where: 1 = n1 - 1 = 10 - 1 = 9 2 = n2 - 1 = 9 - 1 = 8

Look in the table under 9 in the numerator and 8 in the denominator. The right (lower) critical value is given by:

Look in the table under 8 in the numerator and 9 in the denominator. The left (upper) critical value is given by:

Step 4: Draw the statistical conclusion. If Fcalc > Fcritical, then reject the null hypothesis, because the variances are different. Since the calculated F value of 1.39 is between the critical values of 0.31 and3.39, we fail to reject the null hypothesis and cannot conclude that the population variances of Center 1 and Center 2 are different at a 95% confidence level.

Tests for Proportion Introduction

The statistical tests for proportion that a Quality Professional would commonly use are: One-proportion Two-proportion Chi-square

Examples of the One-proportion and Two-proportion tests and the steps to calculate them will be shown in this sub-topic. The Chi-square test will be covered in the Contingency Tables and Goodness-of-Fit Test sub-topics later in the course. Situation Summarized data from two or more samples. Sample proportion vs. historic proportion or target. Sample proportion before improvement actions vs. sample proportion after improvement actions. Statistical Test Used Chi-square One-Proportion test Two-Proportion test

One-Proportion Test
The One-proportion test is used when taking a sample from a population, and the number of units of interest is counted in the sample in order to compare the populations mean to some claim. Use When: np and n (1-p) are > 5, Where: n is the sample size p is the proportion

This assumption is necessary for making a normal approximation to the binomial distribution where Z tables can be used. For example, use the One-proportion test to check if there is a statistical difference between: Current fraction defective of a product to the historical fraction defective Current percent of yes votes on a proposition to the percent in a prior election

One-Proportion Test
Null hypothesis Ho: p = po Where po is the claim value for comparing the sample. Alternate hypothesis may take one of these forms: Ha: p po Ha: p < po Ha: p > po
Test Statistic

where p' = the proportion of units of interest in the sample.

One-Proportion Test
Critical Values/Reject Regions For Alternative Hypothesis H a: p p o H a: p < p o H a: p > p o z < -z z > z Reject Ho if: z < -z/2 or z > z/2

Two-Proportion Test
The Two-proportion test is used to determine if a proportion from one sample is statistically different than a proportion from another sample. In each sample, units of interest are counted, and a proportion is calculated relative to the total sample in order to compare the proportions to each other. Use when: np and n (1-p) are > 5 where n is the sample size and p is the proportion. This assumption is necessary for making a normal approximation to the binomial distribution where Z tables can be used. For example, use the Two-proportion test to check if there is a statistical difference between: Proportion defective before and after a process improvement Percent accuracy of form completion between two different office locations

Null hypothesis Ho: p1= p2 Where p1 and p2 are the proportions in the populations being compared. Alternative hypothesis may take one of these forms: Ha: p1 p2 Ha: p1 < p2 Test Statistic

Ha: p1 > p2

One-Proportion Test Example

Product accuracy must be on target at 90%, so use the one-proportion test to determine if the current process is on target. A sample n of 500 products was taken and 400 were accurate. Assume = 0.05.

Step 1: Establish the hypotheses. Ho: p = 0.90 Ha: p < 0.90 Step 2: Calculate the test statistic. Data was collected to calculate p (proportion of accuracy):

p = population proportion n =sample size x = number of items in the sample with the defined attribute p' = sample proportion= x/n = 400/500 = 0.8 p0 = the hypothesized proportion

Step 3: Determine the critical value. Using = 0.05, see the Normal Distribution Table, The test Z value is 1.645.


Step 4: Draw the statistical conclusion. If Zcalc < -Z hypothesis.
critical,

reject the null hypothesis. Otherwise, do not reject the null

Since Zcalc < -Z

critical,

reject the null hypothesis: -7.5 < -1.645.

Accuracy is not on target at a goal of 90% (Ha: p < Target).

Two-Proportion Test Example

Product accuracy must improve towards the target of 90%. Process improvements have been implemented, and the project manager wants to determine if these improvements have increased accuracy. In the original sample (n) of 500, 400 were accurate. Another sample was taken after the improvements were implemented, and 220 out of 250 were deemed accurate. Step 1: Establish the hypotheses. Ho: p1 = p2 Ha: p1 < p2 Step 2: Calculate the test statistic. Data was collected to calculate p (proportion of accuracy): p1 n1 x1 p1 p2 and p2 = population proportions and n2 = sample sizes and x2 = number of items in the samples with the defined attribute = x1/n1 = 400/500 = 0.8 (original sample) = x2/n2 = 220/250 = 0.88 (2ndsample)

Step 2 Calculation

Step 3: Determine the critical value. Using = 0.05, see the Normal Distribution Table above. The test Z value is 1.645.

Step 4: Draw the statistical conclusion. If Z calc < -Z critical, then the null hypothesis is rejected. Otherwise, do not reject the null hypothesis.

Since -2.73 < -1.645, we reject the null hypothesis, and conclude that the

solutions implemented have improved the accuracy of the process.

Interpreting Results
In testing hypotheses, the null hypothesis is rejected when the test statistic falls in the critical region. These regions were defined by the relationship to the critical values in each of the sample problems. The critical values were based on the level of alpha risk the user was willing to accept. In most computer programs that perform hypothesis testing, the critical values and region are not defined. Instead, the outputs provide a pvaluealong with the test statistic. The probability value (p-value) of a statistical hypothesis test is the probability of getting a value more extreme than the observed value if the null hypothesis were true. The p-value is compared to the desired significance level of our test, and, if it is smaller, the result is significant. Choose appropriate alpha risk, generally 0.05 (95% confidence level). Verify correct sample size. Typically, if p > 0.05, fail to reject the Ho(null) hypothesis. Typically, if p 0.05, reject the Ho(null) hypothesis.

Paired Comparison Test

Paired-comparison t-tests are powerful ways to compare data sets by determining if the means of the paired samples are equal. Making both measurements on each unit in a sample allows testing on the paired differences. An example of a paired comparison is two different types of hardness tests conducted on the same sample. Once paired, a test of significance attempts to determine if the observed difference indicates whether the characteristics of the two groups are the same or different. A paired comparison experiment is an effective way to reduce the natural variability that exists among subjects. It also tests the null hypothesis that the average of the differences between a series of paired observations is zero. A paired comparison can also be the same test performed on two possibly different populations. For example, does a money sorter of Company A have longer life than the money sorter of Company B?

For Example

In this paired t-test for two population means example, each paired sample consists of a member of one population and that members corresponding member in the other population. A candy company will be using a new chocolate recipe, and the plant manager suspects that the cycle time to produce chocolates will be impacted. She is claiming that there will be a need for an increase in staff. Cycle time for a sample size of 10 chocolates was tracked for each type of recipe on a machine that produces the chocolates made from both recipes. Does the data indicate that the new chocolate recipe increases cycle time when = 0.05? Assume that the differences are normally distributed.

Sample # Old recipe (time in secs.) New recipe (time in secs.) Difference, d

1 2 3 4 5 6 7 7 0 6 6 0 8 7 1 9 8 1 5 5 0 5 5 0

7 5 6 -1

8 9 8 8 0 9 7 2

10 7 7 0 6.9 6.6 0.3

Paired Comparison Test Steps

Step 1: Establish the hypotheses.

D = 1 - 2 = 0 Ho: D = 0 Ha: D 0 The established alternate hypothesis test is a: Two-tail test when Hais a statement of does not equal () Left-tail test when Ha has the < sign Right-tail test when Ha has the > sign

Step 2: Calculate the test statistic.

Step 3: Determine the critical value. Click T-test Table above, to find the critical value using degrees freedom of n -1. Sinced.f. = 10 -1 and = 0.05 with a two-tailed test, the critical value is in the ninth row of the t.025 (2.262).

Step 4: Draw the statistical conclusion. If t calc > t critical or tcalc < -t critical, reject the null hypothesis. Otherwise, do not reject the null hypothesis.

The calculated value of 1.152 is not in the reject region (1.152 < 2.262), so therefore we fail to reject the null hypothesis. At a 95% confidence level, the data suggests that the cycle time did not change using the new chocolate recipe, therefore refuting the claim that additional staff is needed.

Analysis of Variance (ANOVA)

Analysis of variance (ANOVA) is a technique to determine if there are statistically significant differences among group means by analyzing group variances. An ANOVA is an analysis technique that evaluates the importance of several factors of a set of data by subdividing the variation into component parts. What does ANOVA test? ANOVA tests to determine if the means are different, not which of the means are different: Ho: 1 = 2 = 3 Ha: At least one of the group means is different from the others. Similarities to Regression ANOVA is similar to regression in that it is used to investigate and model the relationship between a response variable and one or more independent variables. However, analysis of variance differs from regression in two ways: The independent variables are qualitative (categorical). No assumption is made about the nature of the relationship (i.e., the model does not include coefficients for variables).

Relationship to the Two-sample t-test ANOVA extends the Two-sample t-test for testing the equality of two population means to a more general null hypothesis of comparing the equality of more than two means, versus not all of them being equal. The reason for using ANOVA instead of multiple t-tests is that since the t-test has a chance of being wrong just by sheer luck, the more averages tested, the greater the chance of a false positive. ANOVA corrects that by viewing the whole system at once.

One Proportion Test

Critical Values/Reject Regions For Alternative Hypothesis H a: p p o H a: p < p o H a: p > p o z < -z z > z Reject Ho if: z < -z/2 or z > z/2

One-way ANOVA Assumptions

STRONG>One-way ANOVA is used to determine whether data from three or more populations formed by treatment options from a single-factor designed experiment indicate that the population means are different. There are three basic underlying assumptions in using One-way ANOVA (in actual application you may need to test to verify them): All samples are random samples from their respective populations and are independent. Distributions of outputs for all treatment levels follow the normal distribution. Equal or homogeneity of variances.

Three call centers (A, B, and C) are being tested to see if customer wait time is statistically the same. A sample of five wait times was taken from each call center. Is there a difference in any of the three call centers? Assume = 0.05.
Step 1: Establish the hypotheses. Ho: 1 = 2 = 3 Ha: At least one of the group means is different from the others. Step 2: Calculate the test statistic. (Step 2 continues on the next page). Calculate the average of each call center (group) and the average of the samples: Call Center A Time 1 Time 2 Time 3 Time 4 Time 5 Average Overall Average 17 23 18 20 19 19.4 20.73 Call Center B 28 26 24 23 26 25.4 Call Center C 16 15 17 18 21 17.4

Step 2: Calculate SSFactor

The sum of squares is calculated by subtracting the average of each call center (group) from the overall average, squaring the result, and adding up the results and multiplying by the number of samples per call center (group): Group Call Center A Call Center B Call Center C Group Average 19.4 25.4 17.4 Overall Average 20.73 20.73 20.73 Difference -1.33 4.67 -3.33 Sum of diff. squared Samples per group SS group Difference2 1.7689 21.8089 11.0889 34.6667 5 34.67 X 5 = 173.4

Step 2: Calculate SSError

The error of the sum of squares is calculated by summing the squared differences between each individual and its group mean and then adding the totals to get the sum of squares for the error term: Call Center A 17 23 18 20 19 Group Average 19.4 19.4 19.4 19.4 19.4 Difference -2.4 3.6 -1.4 0.6 -0.4 Difference2 5.76 12.96 1.96 0.36 0.16 Total Call Center A Call Center B 28 Group Average 25.4 Difference 2.6 Difference2 6.76 21.2 SS (Sum of Squares) SS (Sum of Squares)

26 24 23 26

25.4 25.4 25.4 25.4

0.6 -1.4 -2.4 0.6

0.36 1.96 5.76 0.36 Total Call Center B 15.2 SS (Sum of Squares)

Call Center C 16 15 17 18 21

Group Average 17.4 17.4 17.4 17.4 17.4

Difference -1.4 -2.4 -0.4 0.6 3.6

Difference 1.96 5.76 0.16 0.36 12.96

Total Call Center C Error Sum of Squares

21.2 57.6

Step 2: Calculate SSTotal

The total sum of squares is calculated by summing the squared difference of each individual value as compared to the overall average of the data: Call Center A 17 23 18 20 19 Overall Average 20.73 20.73 20.73 20.73 20.73 Difference Difference2 -3.73 2.27 -2.73 -0.73 -1.73 13.91 5.15 7.45 0.53 2.99 Total Call Center A Call Center B 28 26 24 Group Average 20.73 20.73 20.73 Difference Difference 7.27 5.27 3.27 52.85 27.77 10.69
2

SS (Sum of Squares)

30.03 SS (Sum of Squares)

23 26

20.73 20.73

2.27 5.27

5.15 27.77 Total Call Center B 124.23 SS (Sum of Squares)

Call Center C 16 15 17 18 21

Group Average 20.73 20.73 20.73 20.73 20.73

Difference Difference -4.73 -5.73 -3.73 -2.73 0.27 22.37 32.83 13.91 7.45 0.07

Total Call Center C Total Sum of Squares Step 2: Calculate the ANOVA table.

76.63 231

Degrees of freedom (df) is calculated for the group, error, and total sum of squares: df group/factor = Number of groups (Call Centers) 1 = 3 1 = 2 df error = (Number of data points 1) (Number of groups 1) = (15 1) (3 1) = 12 df total SS= Number of data points 1 = 15 1 = 14

Complete the ANOVA table to determine the F value. The SSFactor, SSError, SSTotal, and df were all calculated previously. This information is transferred into the following table: Source Group Error Total SS 173.4 57.6 231 df 2 12 14 Mean Square 173.4 / 2 = 86.7 57.6 / 12 = 4.8 F (calc) 86.7 / 4.8 = 18.06

The Mean Square is calculated by dividing the SS by df. F(calc) is determined by dividing the group mean square by the error mean square.

Step 3: Determine the critical value. Fcritical is taken from the F distribution table. From F Distribution Table, for this example , when = 0.05 with df = 2 in the numerator and df = 12 in the denominator, the critical value is 3.89.

Step 4: Draw the statistical conclusion. If Fcalc < Fcritical, fail to reject the null hypothesis. If Fcalc > Fcritical, reject the null hypothesis.

Since Fcalc > Fcritical, we reject the null hypothesis: 18.06 > 3.89. This indicates that at a significance level of 0.05, at least one of the call center average wait times is different.

Goodness-of-Fit Tests
In the goodness-of-fit tests, one is comparing an observed (O) frequency distribution to an expected (E) frequency distribution. The relationship is statistically described by a hypothesis test: Ho: Random variable is distributed as a specific distribution with given parameters. Ha: Random variable does not have the specific distribution with given parameters.

The formula for calculating the Chi-square test statistic for this one-tail test is:

A random sample of size n is taken from the population. The degrees of freedom for this test = k m 1, where: k = number of intervals or cells from the sample to form a frequency distribution m = number of parameters estimated from the sample data

For Example
Management believes that the time between machine breakdowns follows the exponential distribution. We track a bank of identical machines for a number of hours between breakdowns. Test the hypothesis that the distribution is exponential using a 95% ( = 0.05) level of confidence.

Goodness-of-Fit Steps 1 and 2

Step 1: Establish the hypotheses. Ho: Distribution is exponential. Ha: Distribution is not exponential. Step 2: Determine lambda () from the observed frequencies. The data are grouped in intervals of 100 hours in the following table:

Time Between Breakdowns (Interval) Interval Number of Breakdowns 0100 325 >100200 180 >200300 63 >300400 53 >400500 33 >500600 18 >600 Total 6 678

From a sample of 678, the average time to breakdown was estimated at 156.6 hours: = 1/156.6 = 0.0064

Goodness-of-Fit Step 3
Step 3: Calculate the expected values. Interval 0 - 100 >100 -200 >200 - 300 >300 - 400 >400 - 500 >500 - 600 >600 e e e e e e e e
0 -0.0064(100) -0.0064(100) -0.0064(200) -0.0064(300) -0.0064(400) -0.0064(500) -0.0064(600)

Probability = 0.4727 = 0.2493 = 0.1314 = 0.0693 = 0.0365 = 0.0193 -e -e -e -e -e

-0.0064(200) -0.0064(300) -0.0064(400) -0.0064(500) -0.0064(600)

Expected Value 320.5 169.0 89.1 47.0 24.7 13.1 14.6 678.0

= 0.0215

= 1.0000

Goodness-of-Fit Step 4
Step 4: Calculate the test statistic. Using the Chi-square test statistic and the values from the previous data tables:

The degrees of freedom is computed as the number of intervals minus the number of parameters estimated (which is 1, as the mean was estimated from the sample), minus 1:

df = 7 1 1 = 5

Goodness-of-Fit Steps 5 and 6

Step 5: Determine the critical value. use Chi-square Distribution Table above. Look for 5 (df) under the 20.05 column. The critical value is 11.070. Step 6: Draw the statistical conclusion. If 2calc > 2,df, then reject the null hypothesis.

Since 18.878 > 11.070, we reject the null hypothesis at a 0.05 significance level. The time to breakdown for this equipment is not modeled by the exponential distribution (Ha: Distribution is not exponential).

Analyze Module: Lesson Summary

The primary focus of analysis is to begin to closely examine the output (Y) so that you may understand the variables or inputs (Xs) and their effects. It is the role of the Green Belt to gather the Xs identified in the Measure phase and perform analysis to narrow the Xs from possible to probable.

Exploratory data analysis The analysis is conducted through the use of tools such as: multi-vari studies correlation and regression models ANOVA Chi-square paired comparison tests one-sample tests

Hypothesis testing Another important component of analysis is hypothesis testing. Through hypothesis testing, the Green Belt will define a statement in regard to the significance of certain variables and determine if the variables are related or unrelated. In statistical terms, the Six Sigma Green Belt has two choices: Accept the null hypothesis Reject the null hypothesis

The use of the activities and tools during the Analyze phase of the Six Sigma methodology discovers the root causes by identifying significant Xs impacting process performance. The Green Belt and the team are now ready to move forward in the project generating, selecting, testing, and implementing solutions to address the root causes.