TECHNOLOGY OVERVIEW

Hypothesis testing for the standard deviation from a normal variate

The BIS.Net Team BIS.Net Team

Hypothesis testing for the standard deviation is strictly a hypothesis test for the variance which requires the following steps:

  • Sample n items randomly
  • Calculate standard deviation
  • Specify a level of significance
  • Specify an equality (<. > or <>)
  • Specify a reference value for the standard deviation
  • Determine the test statistic with the following expression
    • (n-1)*standard deviation^2/reference value ^2
  • Determine the critical region for the test statistic. The critical region depends on the equality i.e. < or > or <>.
  • Compare the test statistic with the Critical region and conclude significance if the test statistic falls outside the critical region.

Alternatively, a p-value can be calculated and if the p-value falls below the specified level of significance the Null Hypothesis is rejected and the alternative Hypothesis is accepted

BIS.Net Analyst and the BIS.Net Inferences APP both use p-values for hypothesis testing as these are more flexible than imposing a predefined level of significance on users.

Standard deviation from a normal variate
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