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• The principle of Pareto helps us identify those vital
causes or factors which mostly contributes for the
Outcomes.
• From management perspective, we can direct our
efforts into selected areas of vital causes, rather than
focussing one very thing at the same time
• It also helps to break down broad causes to more
specific
Summarize the data and rank order categories from
largest to smallest .
Construct the diagram and find the vital few
135 car accident in Florida – 1989
Sort, calculate relative and
cumulative frequencies
Obstructions without
warning
7
Road repairs/Under
construction
39
Loose surface
material
13
Soft or low shoulders 20
Holes 8
Standing water 25
Worn road surface 6
Other 17
total 135
Road repairs/Under
construction
39 0.8889 0.288889
Standing water 25 0,18519 0,474074
Soft or low shoulders 20 0,14815 0,622222
other 17 0,12593 0.754455
Loose surface material 13 0,09630, 0.883564
holes 8 0,05926 0.892355
Obstructions without
warning
7 0,05185 0.935335
Worn road surface 6 0,04444 1
total 135
􀂄 Identify the most important problems through the use
of different measurements scales (e.g., frequency,
cost, etc.) → the most frequent problems are not
always the most costly
􀂄 Analyze different groupings of data (e.g., by product,
by functionality, etc.) → if clear differences don’t
emerge, regroup data
􀂄 Measure the impact of changes made in a process
􀂄 Split causes of a problem → cure the cause not the
symptom
DOs
• Use Pareto to prioritize your actions to ensure
quicker results
• Convert Continuous Data into Ordered
Categories and prepare Paretos
DONTs
• Do not use Pareto for simple segregation of
data Remember, 80-20 Principle is applicable
only in cases where Cause & Effect relationship
exists
Pareto diagram

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Pareto diagram

  • 1.
  • 2.
  • 3.
  • 4.
  • 5.
  • 6. • The principle of Pareto helps us identify those vital causes or factors which mostly contributes for the Outcomes. • From management perspective, we can direct our efforts into selected areas of vital causes, rather than focussing one very thing at the same time • It also helps to break down broad causes to more specific
  • 7.
  • 8. Summarize the data and rank order categories from largest to smallest . Construct the diagram and find the vital few
  • 9. 135 car accident in Florida – 1989 Sort, calculate relative and cumulative frequencies Obstructions without warning 7 Road repairs/Under construction 39 Loose surface material 13 Soft or low shoulders 20 Holes 8 Standing water 25 Worn road surface 6 Other 17 total 135 Road repairs/Under construction 39 0.8889 0.288889 Standing water 25 0,18519 0,474074 Soft or low shoulders 20 0,14815 0,622222 other 17 0,12593 0.754455 Loose surface material 13 0,09630, 0.883564 holes 8 0,05926 0.892355 Obstructions without warning 7 0,05185 0.935335 Worn road surface 6 0,04444 1 total 135
  • 10.
  • 11. 􀂄 Identify the most important problems through the use of different measurements scales (e.g., frequency, cost, etc.) → the most frequent problems are not always the most costly 􀂄 Analyze different groupings of data (e.g., by product, by functionality, etc.) → if clear differences don’t emerge, regroup data 􀂄 Measure the impact of changes made in a process 􀂄 Split causes of a problem → cure the cause not the symptom
  • 12.
  • 13. DOs • Use Pareto to prioritize your actions to ensure quicker results • Convert Continuous Data into Ordered Categories and prepare Paretos DONTs • Do not use Pareto for simple segregation of data Remember, 80-20 Principle is applicable only in cases where Cause & Effect relationship exists