DISCRIMINANT ANALYSIS

MUHAMMED NOWFAL.SS2 MBA

Meaning

• It is used to discriminate which variable (s) discriminate between two or more naturally occurring groups.

• Appropriate statistical technique when the dependent variable is categorical and independent variables are quantitative.

• It undertakes as the same task as multiple linear regression by predicting the outcome.

• The discriminant analysis aims at studying the effect of two or more predicting variable on certain evaluation criterion.

• the evaluation criterion may be good or bad ( while grouping investment based on ROR) , like or dislike ( while grouping products by consumers in terms of their flavor) , successful or unsuccessful ( while grouping salesmen in terms of meeting sales target )

Objectives

• Development of discriminant function ( combination of independent variables that will best discriminate the categories of the dependent variables)

• Determination of which predictor variable contribute to most of the intergroup differences.

• To evaluate the accuracy of classification

Two group and multiple discriminant analysis

• When the criterion variable has two categories, it is two group discriminant analysis.

• When there is three or more categories it is multiple discriminant analysis.

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