Understanding Business Statistics

CHAPTER 13

F Tests and Analysis of Variance

LEARNING OBJECTIVES

After completing the chapter, you should be able to

1. Describe the F distribution and use an F table.
2. Use the F distribution to test the equality of two population variances.
3. Test the equality of means for multiple populations using one-way analysis of variance (ANOVA).
4. Discuss the elements of experimental design and describe completely randomized designs, block designs and factorial designs.
5. *Apply analysis of variance to block designs and factorial designs.

   *from the extended discussion of experimental design available online as Chapter 13 Part 2.

EVERYDAY STATISTICS

Flip Flop

Mention the word “flop” in Hollywood and movies like Eddie Murphy's The Adventures of Pluto Nash (2002), Matthew McConaughey's Sahara (2005) and the animated Mars Needs Moms (2011) come to mind—all of which had net losses in excess of $146 million. Disney's more recent disasters, John Carter (2012) and The Lone Ranger (2013) are each expected to lose nearly $200 million.

Producing a movie is risky business, and the stakes are obviously high. At a time when the average movie costs nearly $60 million to make and another $30 million to market, studios are under tremendous pressure to find ways of identifying commercially viable movies. Enter Wharton Professor of Information Management Josh Eliashberg.

Says Eliashberg, “Despite the huge ...