The application of factor analysis to industrial engineering problems



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The concept of factor analysis is developed and described mathematically. The principal-factor technique and the varimax rotation--which make up the factor analytic approach used in this paper--are also developed. To illustrate the kinds of problems for which factor analysis is suited, samples from the literature are described. The "classic procedure", which is believed to be a requisite for successful factor analysis, is developed. Next, the types of problems arising in industrial engineering and operations research are analyzed, and contrasted with those in other disciplines in order to determine likely problem areas for factor analysis. Applications of factor analysis in industrial and business environments are presented, with an accompanying discussion. On the basis of these applications, it is concluded that factor analysis can offer a significant contribution as a preliminary statistical tool in these areas; that is, when certain conditions are present, factor analysis can often be used as an initial screening technique to analyze a large body of data and reduce it to a more understandable space. A description of these conditions is included.