Hypothesis Test for

Inferential Statistics

Hypothesis Test
Are the two sets of
data significantly
different?

Are my solution
making any
difference?

Hypothesis Test
What is hypothesis and hypothesis
Testing?

Why do we need it?

How hypothesis testing works?

What are the steps in conducting the

hypothesis test?

What is Hypothesis Testing?

A hypothesis is a claim or
statement about the property of
population

A hypothesis test is a method

for making decisions using data.
This powerful statistical tool, allows
the users to determine whether the
difference observed between the
groups of data is real or just a
result of a common cause or
natural variation
Variation
is the of
inevitable
differences
between
Because
variation,
no two
things
outputs of a process. There are two types of variation:

will be exactly alike

Common cause are variation cause by small

numerous
it is therefore
and
random
contributions.
This variation
difficult
to judge
of
is inherent to
the system and cannot be controlled.

the difference is just due to normal

or there
is really
a by large
variations
Special cause
are variations
caused
dominant
contributors that is outside the system and
difference
can be

controlled

Hypothesis addresses this by

testing statistical significance of the

Why do we need hypothesis testing?

Knowing the real difference between two groups of

data helps us
make accurate and statistically sound decisions in
Purposes:
Sample Applications:
matters
like:
Comparing before
and after
performance

Verifying the effectiveness

of corrective action

Determining which
has the better
performance

Comparing the
performance of subpart
against the subpart

Testing the equality of

performance

Identifying the cheaper

alternative part

Testing the inequality

of performance

Verifying root cause of the

problem

The Null and Alternative Hypothesis Test

The Null Hypothesis (H0)

The statement that claims that the effect or

difference
is absent, or the two items being compared are
equal

H0: Brand Xave = Brand

Yave
The Alternative Hypothesis (HA)

The statement must be true if the null

hypothesis is false.
Is the hypothesis that you are trying to prove.

(two tailed) HATest

for not
: Brand
Xave equal
Brand Yave
HA: Brand Xave > Brand Yave
(upper tailed) Test for greater than
HA: Brand Xave < Brand Yave
(lower tailed) Test for lower than

Hypothesis Testing Type I and Type II error

True State of Nature
The null
hypothesis is
true
We decide to
reject the
null hypothesis

Type I error
(rejecting a true
null hypothesis)

The null
hypothesis is
false
Correct
decision

Decision
We fail to
reject the
null hypothesis

Correct
decision

Type II error
(failing to reject
a false null
hypothesis)

How hypothesis test makes decision?

The null hypothesis is always

assumed
unless
the
In the trialtrue
court
the accused
is
evidence
or data innocent
is sufficient
usually assumed
tounless
reject this
assumption
proven
guilty.
in favor of alternative hypothesis.

How hypothesis test makes decision?

In If
order
the P-value
to test decide
is lowerwhether
than the
orpreselected
not to rejectlimit
the
H0 usually
in favor0.05,
of
rejected test computes a number called a
HA ,Ha
hypothesis
0 is
Alpha(
Reject
H0) Risk
p-value
P-value = 100
P-value = 0

Do not reject H0

P-Value
Decision:

P-Value

Reject Ho

Assumed H0 is true

P-value
= Chance
ofthe
being
if H0 is
Alpha(
) Risk =
cutwrong
off point
P-value < rejected
risk reject H0
P-value > risk do not reject H0
Alpha risk is chosen based on criticality:
0.1 Moderate (1 mistake in 10
decisions)
0.05 Important (1 mistake in 20
decisions)
0.01 Critical
(1 mistake in 100