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    Pareto Analysis

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    api-3855831
    A Pareto chart is used to graphically display differences between groups of data in descending order of frequency. It shows the cumulative percentage of occurrences on the right vertical axis. This allows identification of the largest issues or sources responsible for the majority of problems based on the 80/20 rule, where 20% of causes often create 80% of the effects. Pareto charts help focus improvement efforts on the most impactful areas.

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    Pareto Analysis

    Uploaded by

    api-3855831
    515 views2 pages
    A Pareto chart is used to graphically display differences between groups of data in descending order of frequency. It shows the cumulative percentage of occurrences on the right vertical axis. This allows identification of the largest issues or sources responsible for the majority of problems based on the 80/20 rule, where 20% of causes often create 80% of the effects. Pareto charts help focus improvement efforts on the most impactful areas.

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    A Pareto chart is used to graphically display differences between groups of data in descending order of frequency. It shows the cumulative percentage of occurrences on the right vertical axis. This allows identification of the largest issues or sources responsible for the majority of problems based on the 80/20 rule, where 20% of causes often create 80% of the effects. Pareto charts help focus improvement efforts on the most impactful areas.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    515 views2 pages

    Pareto Analysis

    Uploaded by

    api-3855831
    A Pareto chart is used to graphically display differences between groups of data in descending order of frequency. It shows the cumulative percentage of occurrences on the right vertical axis. This allows identification of the largest issues or sources responsible for the majority of problems based on the 80/20 rule, where 20% of causes often create 80% of the effects. Pareto charts help focus improvement efforts on the most impactful areas.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    of 2

    Purpose of a Pareto Chart

    A Pareto chart is used to graphically summarize and display the relative importance of
    the differences between groups of data.

    Sample Pareto Chart Depiction

    How to Construct a Pareto Chart

    A Pareto chart can be constructed by segmenting the range of the data into groups (also
    called segments, bins or categories). For example, if your business was investigating the
    delay associated with processing credit card applications, you could group the data into
    the following categories:

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    The left-side vertical axis of the Pareto chart is labeled Frequency (the number of counts
    for each category), the right-side vertical axis of the pareto chart is the cumulative
    percentage, and the horizontal axis of the pareto chart is labeled with the group names
    of your response variables.

    You then determine the number of data points that reside within each group and
    construct the Pareto chart, but unlike the bar chart, the Pareto chart is ordered in
    descending frequency magnitude. The groups are defined by the user.
    What Questions the Pareto Chart Answers

    What are the largest issues facing our team or business?


    What 20% of sources are causing 80% of the problems (80/20 Rule)?
    Where should we focus our efforts to achieve the greatest improvements?
    What is 80/20 rule.

    Vilfredo Pareto was an economist who is credited with establishing what is now widely
    known as the Pareto Principle or 80/20 rule. When he discovered the principle, it
    established that 80% of the land in Italy was owned by 20% of the population. Later, he
    discovered that the Pareto principle was valid in other parts of his life, such as
    gardening: 80% of his garden peas were produced by 20% of the peapods.

    Some Sample 80/20 Rule Applications

    80% of process defects arise from 20% of the process issues.


    20% of your sales force produces 80% of your company revenues.
    80% of delays in schedule arise from 20% of the possible causes of the delays.
    80% of customer complaints arise from 20% of your products or services.
    (The above examples are rough estimates.)

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