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Summary of a Statistical Test

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Essential Eight Communications, Inc. (E8C) is an Oklahoma based Telecommunications Company that currently uses sub-contractors to service and installs their equipment.   Some company officers feel it would be more profitable to have full time employees that are able to travel throughout the states of: Arkansas, Louisiana, Oklahoma, and Texas, than it would be to continue to use contractors.   This paper will describe the results of an ANOVA test on the West South Central Census Division and Appalachians and West Rockies.   It will also show how the use of ANOVA testing can evaluate the solutions of hiring employees to do the same work they contract out.
“A hypothesis is a statement about a population. Data are then used to check the reasonableness of the statement.”   (Lind, Marchal & Wathen 2004).   The null hypothesis: H0=m1=m2=m3 and the alternate hypothesis: Ha =m1>m2>m3.   Where m1 is the mean wage of an E8C contract employee, 27.72, m2 is the mean wage of a telecommunication worker, 19.03, for the West South Central Census Division (National Compensation Survey-Wages), and m3 is the mean wage for the Appalachians and West Rockies.   According to Lind, “Hypothesis testing is a procedure based on sample evidence and probability theory to determine whether the hypothesis is a reasonable statement.”   The level of significance is 95 percent.  
“Another use of the F distribution is the analysis of variance (ANOVA) technique in which we compare three or more population means to determine whether they could be equal. To use ANOVA, we assume the following:
1. The populations follow the normal distribution.
2. The populations have equal standard deviations (s).
3. The populations are independent.
When these conditions are met, F is used as the distribution of the test statistic.” (Lind, Marchal & Wathen 2004).   ANOVA – The one-way analysis of variance allows us to compare several groups of observations, which are independent but possibly with a different mean...

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