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Pareto Chart Tool

Pareto chart is also termed as Pareto analysis. This chart visually depicts the relative importance of problems or conditions. It is based on the Vilfredo Pareto’s 80-20 principle, according to which major effect is the result from a few causes. If the causes for the defective output are identified and recorded, it will be observed that the 80 percent of effect is due to 20 percent of causes.

Procedure for developing Pareto Chart is given as follows:

Step 1 : list the activities or causes in a table and their frequency of occurrence.

Step 2 : place these causes in descending order of magnitude of frequency.

Step 3 : calculate the total for the complete list of observation. Then, calculate percentage of the total that each cause represents. Add a cumulative percentage column to the table.

Step 4 : draw Pareto chart by plotting the causes on the horizontal axis and the cumulative percentage on the vertical axis. The cumulative percentage from all the causes can be shown by drawing cumulative curve on the cumulative points.

Step 5 : On the same chart, plot the bar graph with the causes on the horizontal axis and percentage frequency on the vertical axis.

Example of Pareto Chart

Consider, sixty customers have reported five different types of complaints, those are A, B, C, D, and others. The numbers of complaints for each type are 30, 12, 6, 2, and 10 respectively. These data can be used for calculating the cumulative total, percent of overall total, and cumulative percent as shown in Table . As shown in the figure complaints A and B are the causes for 80 percent of the total complaints.

Chart:

Another of Pareto Chart

Create a Pareto chart based on the following information.