# POSSIBLE KINDS OF VALUES ADDED BY THE PURCHASING DEPARTMENT. Jan Telgen Corina Pop Sitar

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11 Appendix B In order to study the relation of dependence or independence between the factors affecting value added (noted with F) and the values added (noted with V) we assembled the results in what is called a 2*2 contingency table (Bickel and Doksum, 1997): F=0 F=1 V=0 n 00 n 01 n 0+ n 0+ = n 00 + n 01 n 1+ V=1 n 10 n 11 n +0 n +1 k n 1+ = n 10 + n 10 Where n 00 is the number of companies with F=0 and V=0 (number of companies which gave a NO response to the statements regarding the factor (F) and the value added (V). We consider the following statistics: (observed expected) 2 cells expected which is called Pearson s χ2 statistics. Clearly χ2 is a measure of the departure of the observed n 00 from their expectation n 0+ n +0 independent). k In our case: 1 1 ( n ij - χ2 = i=0 j=0 n i+ n +j ) 2 k n i+ n +j k = χ2 This means that χ2 is approximately a χ 1 2 distribution. under hypothesis H (H 0 : F and V are χ 1 2 ( chi-square with 1 degree of freedom) Suppose that we determine the value of χ2. If χ2 > 3.84 (this value depends on the number of observations) then the hypothesis H 0 is not true, this means that F and V are dependent. In the case that χ2 < 3.84 then the H 0 is true and F and V are independent. About the authors Prof. dr. Jan Telgen and Corina Pop Sitar. University of Twente Initiative for Purchasing Studies (UTIPS). P.O. Box AE, Enschede, The Netherlands. Tel: Fax: C.E.Pop- The 10 th International Annual IPSERA Conference

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