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Assignment: Factor Analysis - Dell Computers.

There are thirteen components/ indicators of ‘Performance Rating’ of Dell Computer. The first
set of questions involve certain features and services provided (or not) to personal computer
customers.

The objective of doing the Factor Analysis is to reduce the variable size to a few factors
encapsulating majority of the data.

By measuring adequacy of the sample using test statistic - Kaiser-Meyer-Olkin (KMO) to


compare the magnitudes of the observed correlation coefficients to the magnitudes of the
partial correlation coefficients.

Generally, a value greater than 0.5 is desirable for conducting Factor Analysis. For this dataset,
the value is 0.883.

Principal Components Analysis is done to extract the information into a few factors, while
making the factors un-correlated / low-correlated to each other.

The information is extracted from all the thirteen variables. Component 1 contain 35.647% of
the total variance; the eigenvalue for the factor indicated the total variance attributed to that
factor, i.e. 4.634. In the similar fashion, Component 2 has eigenvalue of 1.411, and Component
3 has eigenvalue of 1.017.
Out of thirteen variables, only these three variables have eigenvalue greater than 1. But these
three components only explain 54.33% of the total variance. Upon including one more factor,
the percentage rose to 61.198.

Group 6: Rahul Kumar | Saba Khan | Satya Vijay Nath | Sayantan Das | Sudeshna Choudhury | Vishnu Gopal 1
Assignment: Factor Analysis - Dell Computers.

The Factor Matrix contains the coefficient used to express the standardized variable in terms
of the factors. These coefficient, the factor loadings, represent the correlation between the
factors and the variables.

The un-rotated factors are hard to interpret because the factors are correlated with many
variables. Therefore, the matrix is transformed using rotation. For our analysis, The Varimax
Procedure is used.

While identifying the variables that have large loadings on the same factor, it was noted that a
few variables are not correlated to other variables significantly. Therefore, those variables
correspond to a specific factor.

Group 6: Rahul Kumar | Saba Khan | Satya Vijay Nath | Sayantan Das | Sudeshna Choudhury | Vishnu Gopal 2
Assignment: Factor Analysis - Dell Computers.

We choose Four-Factor analysis because:


• It explains 61.198 % of the variability.
• In the correlation matrix, the variable 7 and 13 has low correlation with other variables,
which implies that these two factors do not interact well with other. Therefore, these
two variables are counted in two separate factors.

Group 6: Rahul Kumar | Saba Khan | Satya Vijay Nath | Sayantan Das | Sudeshna Choudhury | Vishnu Gopal 3