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Pareto Diagrams


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Explanation of how to develop a Pareto Diagram

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Pareto Diagrams

  1. 1. Pareto Diagrams Made Easy!
  2. 2. History of Pareto <ul><li>Vilfredo Pareto (1848 – 1923) </li></ul><ul><ul><li>Established the 80/20 Rule </li></ul></ul><ul><ul><ul><li>Also known as “the vital few and the trivial many </li></ul></ul></ul><ul><ul><li>Interpreted as 80% of the world’s riches are controlled by 20% of the population </li></ul></ul>
  3. 3. What are Pareto Diagrams? <ul><li>They are specialized column graphs </li></ul><ul><li>Used to identify major and minor issues </li></ul><ul><li>Helps to prioritize issues clearly </li></ul><ul><li>Easily understood and commonly used in Management Presentations </li></ul>
  4. 4. How to make a Pareto Diagram <ul><li>The first requirement is to use this for accurately collected data related to one issue </li></ul><ul><li>Although similar to a column graph, it has a cumulative feature that will equal 100% </li></ul>
  5. 5. Beginning a Pareto <ul><li>Here is a standard example of a bar graph depicting the number of errors in the data input process for invoices </li></ul>
  6. 6. Finishing a Pareto <ul><li>In this example, a cumulative line is added after each column extending to the limit of 100% </li></ul>
  7. 7. Benefits of a Pareto <ul><li>It clearly displays which data is most significant </li></ul><ul><li>Allows easier decision making as to which issues to attack first </li></ul><ul><li>Upholds the theory that 80% of problems are caused by 20% of the issues </li></ul><ul><li>Allows you to maximize your results by attacking major issues first </li></ul><ul><li>Most cost effective use of resources to solve problems </li></ul>