## Friday 14 December 2018

The Pareto diagram is a graphical overview of process problems in ranking order from the most frequent, down to the least frequent. It illustrates the frequency of fault or defect types. Using a Pareto, you can decide which is the most serious or frequent offender.

Learn what Pareto chart is and how the analysis can be implemented and measure 80-20 rule. Know the benefits and practical illustration of Pareto analysis.

## Overview

Vilfredo Federico Damaso Pareto, known by her maiden name, was an exemplary sociologist, philosopher and economist of the 19th century, very prolific on the grounds of politics and the economy, highlighted by his thesis on the distribution of income and the individual consumer choice theory.

Creator of such important concepts in the field of economic theory as the efficiency pare Tiana, indifference curves, or Pareto distribution. Making a contribution of tremendous value for the further development of the micro economy, marketing and the choice theory.

## What is a Pareto diagram?

A Pareto chart is a special type of bar chart where the plotted values are organized from greater to lesser. Use a Pareto diagram to identify defects that occur with greater frequency, the most common causes of defects or the most frequent causes of complaints from customers.

## Used to Pareto diagram:

• Presenting, in order of importance, the contribution of each element to the overall effect

• Order the opportunities for improvement.

A Pareto chart is a simple graphical technique to sort items, from the most common to the least common, based on the Pareto principle.

There is consensus to admit that in many situations that arise in organizations, the problems have unequal importance, phenomenon which is not limited to matters relating to quality.

### 80/20 Rule

In these cases, is given the principle of "the vital few and the trivial many known as the Pareto principle. This ratio, in a vast majority of cases, has proved to be approximately 20% for the "vital few" and 80% for the "trivial many". This 20% is responsible for most of the effect occurring.

This denomination is due to swear, who at the end of the 40s understood that it is a principle of universality.

Using the cumulative M.O. Lorenz curves can be developed an analysis of Pareto's fundamental interest in relation to the theme of quality.

### The Pareto principle is simultaneously several things:

• State of nature that occurs in certain circumstances,

• It is a way of taking forward projects (what can be called a management tool), and also

• Is a way of thinking about problems that affect all things (which is dominated by the principle of rationalization).

If stands out the most important elements of the less important, it has to obtain greater improvement with the least effort.

Pareto diagram shows, in descending order, the relative contribution of each element to the overall effect. The relative contribution can be based on the number of events, the cost associated with each element or other measurements of impact on the effect. Block is use to indicate the relative contribution of each element. A cumulative frequency curve is use to indicate the cumulative contribution of the elements.

The Pareto diagram is a classic example of a histogram (which most later devote a post)..

## Methodology.

Prior to build a Pareto diagram is need to collect the facts, observations and the results need. This can be in the following way:

• Each Member of the team votes on what are the main categories on a diagram of Ishikawa diagram). It may be useful for everyone to substantiate your vote, way to facilitate the achievement of a consensus quickly or draw the Pareto diagram with the votes

• A person has 5 votes and can place them anywhere on the diagram of cause effects diagram. It is recommend to do this along with a cut of the session. So that the moderator has time to do Pareto diagram with the results of the vote.

• The same methodology can be use giving each person 100 points to distribute between the order cards, using the same methodology to locate them.

### Pareto Principles

The Pareto principle describes the way in which occur the causes, both in nature and in human behavior. It can be a very powerful management tool to focus the efforts of the staff to the problems and the solutions that have the greatest potential for profitability.

Pareto diagram can also be use to sort data obtained from the application of other than the Ishikawa diagram tools.

### The methodology includes the following phases:

• Select the elements to study.

• You select the unit of measurement for the analysis. For example: number of events, costs, or other measuring impact.

• A select the time period that is to analyses the results obtain.

• A listing of the elements is complete from left to right on the horizontal axis. So that decreases the magnitude of the unit of measurement. Categories containing minor elements can be combine in one category call "other". This category is place on the right end of the shaft.

• Builds two vertical axes, one at each end of the horizontal axis. The left axis scale should be calibrate in the unit of measurement. Its height should be equal to the sum of the magnitudes of all the elements. The scale on the right axis must have the same height and be calibrate from 0 to 100%.

• A rectangle whose height represents the magnitude of the unit of measure for this item is draw up each element.

• Built cumulative frequency curve, adding the magnitudes of each element, from left to right

• The Pareto chart is use to identify the most important elements for the improvement of the quality.

## Example of a Pareto diagram.

A manager wants to investigate the causes of the dissatisfaction of customers at a particular hotel. Manager investigates and records the reasons for the complaints of customers.

In general, the axis and on the left is the frequency of occurrence. While the shaft and on the right is the cumulative percentage of the total number of occurrences. The x-axis shows the categories of defects, complaints, waste, etc.

## What is a weighted Pareto diagram?

A diagram of Pareto weighted not only considers the frequency of occurrence but also its importance. A weight Pareto diagram may explain the severity of the defects, or cost or any item to which you want to track.

For example, suppose that you have 5 defects of coating that is doing follow-up:

Wrinkles, spots, stripes, dirty splashes and bubbles.