**Hypothesis testing** and selecting the correct test can be challenging especially in the learning stages. A Six Sigma project manager should understand the formulas and computations within the most commonly applied tests.

In hypothesis testing, samples represent a subset of the population which are used to infer conclusions about the population. There's always a chance or risk (known as alpha-risk and beta-risk) that the selected sample is not representative of the population and one could infer the incorrect conclusion. Assumptions are inferred that allows the estimation of the probability (known as p-value) of getting a wrong conclusion.

Statistical software has simplified the work to the point where comprehension of these tests is convenient to overlook.

CAUTION: A statistical difference doesn't always imply a practical difference, numbers don't always reflect reality.

**Parametric Tests are used when:**

- Normally distributed data
- Non-normal distribution but transformable
- Sample size is large enough to satisfy the Central Limit Theorem
- Require that the data be interval or ratio data

**Nonparametric tests are used when:**

- The above criteria are not met or if distribution is unknown
- These tests are used when analyzing nominal or ordinal data
- Nonparametric test can also analyze interval or ratio data

In general, the power of standard parametric tests are greater than the power of the alternative nonparametric test. As the sample size increases and becomes very large the power of the nonparametric test approaches its parametric alternative.

Nonparametric tests also assume that the underlying distributions are symmetric but not necessarily normal. The assumption is these test statistics are "distribution-free. In other words, there aren't any assumptions made about the population parameters.

When the choice exist on whether to use the parametric or nonparametric, if the distribution is fairly symmetric, the standard parametric tests are better choices than the nonparametric alternatives.

A few example nonparametric tests used are Spearman rank correlation coefficient, Mann-Whitney U, Sign, Wilcoxon rank sum, and Kruskal-Wallis H.

**For 1 sample:** Use Chi-square

**For 2 samples:** Use the F-Test or ANOVA for >2 variances. The F-test assumes the data is normal.

Levene's test is an option to compare variances of non-parametric data.**For >2 samples:** Use Bartlett's Test for parametric data and Levene's Test for nonparametric data

- Define the Problem
- State the Objectives
- Establish the Hypothesis (left-tailed, right-tailed, or two tailed test).
- State the Null Hypothesis (H
_{O}) - State the Alternative Hypothesis (H
_{A}) - Select the appropriate statistical test
- State the alpha-risk (α) level
- State the beta-risk (β) level
- Establish the Effect Size
- Create Sampling Plan, determine sample size
- Gather samples
- Collect and record data
- Calculate the test statistic
- Determine the p-value

**If p-value < α, reject Ho and accept H _{A}**

**If p-value > α, fail to reject the Null, H _{O}**

Try to re-run the test (if practical) to further confirm results. The next step is to take the statistical results and translate it to a practical solution.

It is also possible to determine the critical value of the test and use to calculated test statistic to determine the results. Either way, using the p-value approach or critical value should provide the same result.

The **statistical power** is 1 - β. Usually β is between 10-20%; therefore, the Power typically is 80-90%.

This is the likelihood of finding an effect when there is actually an effect. This is the chance of rejecting the null hypothesis when the null hypothesis is actually false.

A minimum detectable difference, δ, can also be specified. This detectable difference is used to examine a desired difference among:

- Target (or given) value and a sample mean - using 1 sample t test
- Two sample means - using Paired t or 2 sample t tests
- > 2 sample means in ANOVA
- Target (or given) value and a sample proportion
- Two proportions

The minimum detectable difference desired relative to the standard deviation is the **sensitivity **of the test. It is the size of the difference expressed in standard deviations.

Similar to the Coefficient of Variation in that the mean is expressed as relative magnitude in standard deviations. The numerator itself doesn't provide much information, it is when it (or the δ) are expressed in terms of standard deviations are you able to compare two or more values with more meaning.

To simplify the testing process, break down the process into **four** small steps.

Create a table similar to the one below and begin by completing the top two quadrants. The bottom-left contains the results from the test and then converting those numbers into meaning is the practical result which belongs in the bottom-right quadrant.

**Null Hypothesis** characteristics:

- Denoted as "H
_{O}" - Assumed to be true until proven otherwise
- Represents "no difference" or "no change"
- Factor is not statistically significant
- Population follows a normal distribution
- Variation is from random, inherent sources.

This is the hypothesis being tested or the claim being tested. The null hypothesis is either "rejected" or "failed to reject". Rejecting the null hypothesis means accepting the alternative hypothesis.

The null hypothesis is valid until it is proven wrong. The burden of truth rest with the alternative hypothesis. This is done by collecting data and using statistics with a specified amount of certainty. The more samples of data usually equates as more evidence and reduces the risk of an improper decision.

The null hypothesis is never accepted, it can be "failed to reject" due to lack of evidence, just as a defendant is not proven guilty due to lack of evidence. The defendant is not necessarily innocent but is determined (based on the evidence) "not guilty".

There is simply not enough evidence and the decision is made that no change exists so the defendant started the trial as not guilty and leaves the trial not guilty.

**Alternative Hypothesis** characteristics:

- Denoted as "H
_{A}" - Has the burden of proof
- Represents "a difference" or "a change"
- Factor is statistically significant
- Population does not follow a normal distribution
- Variation is from non-random sources.

**The shape of a distribution is normally distributed**

H_{o} = Data is Normal

H_{A} = Data is not Normal

**There is a relationship between sales of a toy and placing it on the ends of aisles**

H_{O}: Slope = 0

H_{A}: Slope does not equal 0

**Supplier ABC’s Part # 34565 weight is not the same as Supplier XYZ’s**

H_{o}= Mean ABC = Mean XYZ

H_{A} =Mean ABC does not equal the Mean XYZ

**People that eat carrots have better eyesight **

H_{o} = eating carrots and eyesight are independent

H_{A } = eating carrots and eyesight are dependent

Running more tests allows you to hone in on the differences and conclude more information that can lead to more effective improvements. There are ways to improve the accuracy of results such as being more specific with testing.

For example, testing for specific numerical differences or looking for differences (or lack of) within a gender, a region, an industry, an age group, a religion, an affiliation, or combination of them.

If you detect a change from large group of people from another that is helpful.....but what about more detail?

Therefore, if possible, test the data by gender, by age group, by hair color, by religion, by political party affiliation, by region, etc. You will begin to identify more meaningful information and generate new discussion.

Several hypothesis test flowcharts are available to subscribers at no additional charge along with other free downloads and tools to help a Green Belt or Black Belt. A couple generic visual aids are shown below.

This module in provides lessons and more detail about commonly used hypothesis tests. This is often a new area of study for those learning about the Six Sigma methodology and represents a significant challenge on certification exams and in real-life application. |

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