Tuesday, 16 January 2018

Pareto Analysis

Pareto charts provide a tool for visualizing the Pareto principle, which states that a small set of problems (the "vital few") affecting a common outcome tend to occur much more frequently than the remainder (the "useful many"). A Pareto chart can be use to decide which subset of problems should be solved first. Even or which problems deserve the most attention.

Pareto Analysis

Principles of Pareto Analysis

The Pareto principle (also known as the 80-20 rule, the law of the vital few, and the principle of factor sparsity) states that, for many events, roughly 80% of the effects come from 20% of the causes. Pareto analysis observe that 80% of the land in Italy was own by 20% of the population.

This principle can be apply to quality improvement to the extent that a great majority of problems (80%) are produced by a few key causes (20%). If we correct these few key causes, we will have a greater probability of success. It is the basis for the Pareto diagram, one of the key tools use in total quality control and Six Sigma.

Step by step process:

1 List all elements of interest
2 Measure the elements, using same unit of measurement for each element.
3 Order the elements according to their measure
4 Calculate the percentage for each element out of the total measurement
5 Accumulate the percentage from top to bottom to equal 100%.
6 Create a bar and line graph, line representing cumulative percentage.
7 Work on the most important element first.

Benefits of Pareto Analysis

Pareto diagrams:

  • Solves efficiently a problem by the identification and the hierarchy. According to their importance, of the main causes of the faults.

  • Sets the priorities for many practical applications. Some examples are: process improvement efforts for increase unit readiness, customer needs, suppliers, investment opportunities.

  • Shows where to focus efforts.

  • Allows better use of limited resources.

A Pareto Diagram is a good tool to use when the process investigate produces data that are broken down into categories. You can count the number of times each category occurs. A Pareto diagram puts data in a hierarchical order. Which allows the most significant problems to be corrected first.

The Pareto analysis technique is use primarily to identify and evaluate nonconformity. Although it can summarize all types of data. It is the perhaps the diagram most often use in management presentations.

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