An application of analysis of variance to examining the effects of product category and location on the sales value of a company

Abstract

This paper examines the effects of the factors, product category and sales location on the sales value of a company. The dataset for the study was obtained from the sales operations department of the company and is constituted by the sales values for four product categories (Air conditioners, refrigerators, washing machines, and generators) across five major locations (Lagos, Abuja, Port Harcourt, Enugu, and Kano). A two-way crossed classification analysis of variance (ANOVA) with multiple observations per unit was employed to examine the effect of each of the aforementioned factors, as well as their interaction effect on sales value. Results show that each factor has a significant effect on the sales value (p < 0.05, in each case). Similarly, interaction between these factors was also found to have a significant effect on sales value (p < 0.05). Moreover, the Tukey’s honestly significant difference (HSD) test was employed to determine which pairs of product categories and sales locations led to the detected significant effect of the factors on sales value. For product categories, it was observed that the detected significant effect on sales value was due to the following pairs: Air conditioners and
generators, refrigerators and washing machines, generators and refrigerators, and air conditioners and washing machines. For locations, all pairs of locations except Abuja and Enugu, and Enugu and Port Harcourt were found to be significantly different. For interaction certain pairs of product-location combinations were found to be significantly different. These include air conditioners in Abuja and air conditioners in Kano, and air conditioners in Abuja and air conditioners in Lagos, amongst others. It can be concluded from this work that sales performance is influenced by both product category and location of sales, and that the effect of one factor depends on the level of the other factor.