Question

1. A consulting firm markets a computerized system for monitoring road construction bids to various state departments of transportation. The firm wants to compare the mean annual maintenance costs accrued by the system users in three different states: Kansas, Kentucky, and Texas. By using the attached StateCost data, solve the model to study whether the qualitative variable State with three categories is significant or not? What is your base level? Discuss whether the expected costs in each state are identical or not. Use a 0.05. Use Minitab or R, and submit the relevant parts of the outputs.

Answer 1

Solution:-

State the hypotheses. The first step is to state the null hypothesis and an alternative hypothesis.

Null hypothesis: u₁ = u₂ = u₃

Alternative hypothesis: At-least one of the u is not equal.

Formulate an analysis plan. For this analysis, the significance level is 0.05.

Analyze sample data.

F statistics is given by:-

$F=\frac{MSB}{MSE}$

F = 3.482

The P-value = 0.045

Interpret results. Since the P-value (0.045) is less than the significance level (0.05), we have to reject the null hypothesis.

Conclusion:-

Reject H₀, There is sufficient evidence for significant differences between the three kinds.