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# Pareto analysis

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Pareto analysis

Pareto analysis

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• 1. Pareto Analysis Dr. Himanshu Hora SRMS College of Engineering & Technology Bareilly (INDIA)
• 2. Introduction • Pareto analysis is a formal technique useful where many possible courses of action are competing for attention • Pareto analysis is a creative way of looking at causes of problems because it helps stimulate thinking and organize thoughts • This technique helps to identify the top 20% of causes that needs to be addressed to resolve the 80% of the problems • Works on principle of “the vital few and the trivial many”
• 3. History • Named after Vilfredo Pareto, an Italian economist and sociologist who lived from 1848 to 1923 • In 1906, He created a mathematical formula to describe the unequal distribution of wealth in his country, observing that twenty percent of the people owned eighty percent of the wealth
• 4. Pareto Analysis: Procedure 1. Gather data on the frequency Causes Percentage of Total Cumulative Percent A 20% 20% B 18% 38% C 15% 53% 2. Rank the causes from the D 11% 64% most to the least important, and E 10% 74% F 6% 80% calculate G 6% 86% H 6% 92% I 5% 97% J 3% 100% of the causes percentage the cumulative
• 5. Pareto Analysis: Procedure 3. Plot with the different causes on the x-axis, ordered from the most to least frequent, and the percentages on the y-axis, from 0 to 100%. Construct a bar graph based on the percentage of each cause 4. Construct a line graph of the cumulative percent
• 6. Pareto Analysis: Procedure 35 100 90 30 80 25 70 60 20 50 15 40 30 10 20 5 10 0 0 a b c d e f g h i j
• 7. Pareto Analysis: Procedure 5. Draw a line from 80% on the y-axis (of cumulative percent) to the line graph that is parallel to the x-axis, and then drop the line down to the X axis. This line separates the important causes from the trivial ones 35 100 90 80 70 60 50 40 30 20 10 0 30 25 20 15 10 5 0 a b c d e f g h i j
• 8. Pareto Analysis: Example Mr. X is trying to determine why his clinic has been reaching such a small proportion of its eligible clients. In carrying out the exercise, he forms a team. The team will first identify the primary reason why users are not using the services. They will then establish the causes for the problem and define a strategy and a plan of action for solving it. The objective of the process will be to improve the quality of the services offered.
• 9. Pareto Analysis Step 1. Frequency analysis Possible Causes of Long Waiting Time Percent of total (A) Policies require excess information on users 1 (B) Policies require complicated procedures 1 (C) Too much paperwork 2 (D) Not enough funding 2 (E) Inadequate schedules 13 (F) Inadequate policies 2 (G) Clinic personnel have too many chores at home 2 (H) Clinic personnel have other jobs 2
• 10. Pareto Analysis (H) Clinic personnel lack punctuality 6 (I) Clinic personnel have insufficient training 2 (J) Clinic personnel aren't motivated 1 (K) Clinic personnel are careless 1 (L) Clinic personnel don't follow the schedule 16 (M) Users forget ID cards 1 (N) Users don't keep appointments 2 (O) Delay in handing over lab results to doctors 14 (P) Outdated methods 12 (Q)Lack of automation 9 (R) Procedures take too long 11
• 11. Pareto Analysis Step 2.Ranking causes Cause Percentage Cumulative % (L) Clinic personnel don't follow the schedule 16 16 (O) Delay in handing over lab results to doctors 14 30 (E) Inadequate schedules 13 43 (P) Outdated methods 12 55 (R) Procedures take too long 11 66 (Q) Lack of automation 9 75 (H) Clinic personnel lack punctuality 6 81 (C) Too much paperwork 2 83
• 12. Pareto Analysis (D) Not enough funding 2 85 (F) Inadequate policies 2 87 (G) Clinic personnel have too many chores at home 2 89 (H) Clinic personnel have other jobs 2 91 (I) Clinic personnel have insufficient training 2 93 (N) Users don't keep appointments 2 95 (A) Policies require excess information on users 1 96 (B) Policies require complicated procedures 1 97 (J) Clinic personnel aren't motivated 1 98 (K) Clinic personnel are careless 1 99 (M) Users forget ID cards 1 100
• 13. Pareto Analysis Step 3. Construct a bar graph based on the percentage of each cause 20 18 16 percentage 14 12 10 8 6 4 2 0 L O E P R Q H C D F G causes H I N A B J K M
• 14. Pareto Analysis Step 4. Construct a line graph based on cumulative % 20 120 18 100 16 percentage 14 80 12 10 60 8 40 6 4 20 2 0 0 L O E P R Q H C D F G causes H I N A B J K M
• 15. Pareto Analysis Step 5. Pareto Diagram 20 120 18 100 16 percentage 14 80 12 10 60 8 40 6 4 20 2 0 0 L O E P R Q H C D F G causes H I N A B J K M
• 16. Pareto Analysis Interpretation of results Approximately 7 factors are responsible for 80% of the waiting time problem. The other 12 factors are responsible for only 20% of the said problem. 20 120 18 100 16 percentage 14 80 12 10 60 8 40 6 4 20 2 0 0 L O E P R Q H C D F G causes H I N A B J K M
• 17. Benefits • Solves efficiently a problem by the identification and the ranking, according to their importance, of the main causes of the faults • Shows where to focus efforts • Allows better use of limited resources • Enhances problem-solving skills • Improves decision making
• 18. References • http://en.wikipedia.org/wiki/Pareto_analysis • http://www.projectsmart.co.uk/pareto-analysis-step-bystep.html • http://thequalityportal.com/q_know03.htm • http://www.managers-net.com/paretoanalysis.html
• 19. Thank You Dr. Himanshu Hora SRMS College of Engineering & Technology Bareilly (INDIA)