Tuesday

Pareto Chart

Posted by Wan Naza at 4:42 AM

. By Kerri Simon
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

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

About 80% of the problems are
from 20% of the causes
differences between groups of data.

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