I am in the early phase of a new project about looking at multiple factors that potentially influence the probability that an item fails quality inspection.
I am interested in seeing whether each operator, machine, product, and change-over responsible significantly affect the failure rate.
The problem is that I know that the items have different failure rates, also within their aggregate groups as product family, etc.
So should I just attempt to continue with the project, and make a categorical variable with 100's of categories? What are the risks and downsides to this, and are there any obvious things I should do differently?
(I guess as a side-note I can mention that what I really wanted was an N-way ANOVA but that was not possible as I am looking at binary data.)