ASSIGNMENT NO.

3
** PARETO CHART **
A. What Is P.C.?
B. Basic Diagram Of P. C.?
C. Case Study O P. C.

- ABHISHEK TIWARI
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A. What Is P.C.?
* 80/20 Rule (aka 80:20 Rule or 80 20 Rule):
Vilfredo Pareto, a turn-of-the-century Italian economit, tudied the ditri!ution of "ealth in different countrie,
concludin# that a fairly conitent minority $ a!out 20% $ of &eo&le controlled the lar#e ma'ority $ a!out 80% $ of a
ociety( "ealth) *hi ame ditri!ution ha !een o!er+ed in other area and ha !een termed the Pareto effect)
*he Pareto effect e+en o&erate in ,uality im&ro+ement: 80% of &ro!lem uually tem from 20% of the caue)
Pareto chart are ued to di&lay the Pareto &rinci&le in action, arran#in# data o that the fe" +ital factor that are
cauin# mot of the &ro!lem re+eal themel+e) -oncentratin# im&ro+ement effort on thee fe" "ill ha+e a #reater
im&act and !e more cot-effecti+e than undirected effort)
* Some Sample 80/20 Rule Applications
80% of &roce defect arie from 20% of the &roce iue)
20% of your ale force &roduce 80% of your com&any re+enue)
80% of delay in chedule arie from 20% of the &oi!le caue of the delay)
80% of cutomer com&laint arie from 20% of your &roduct or er+ice)
* Pareto chart tatitic:
.or the Pareto chart, the follo"in# o+erall tatitic are calculated:
Mean: *he a+era#e of all the +alue in the erie, i)e) the a+era#e !ar
hei#ht)
Sum: *he um of all the +alue in the erie)
* If you are uin# the /utoPareto mode, the follo"in# tatitic are alo calculated
for each cla of data:
Total: *he num!er of item in that cla (!ar))
Pecenta!e: *he &ercenta#e of the "hole data et "hich that !ar account for)
*he Pareto &rinci&le u##et that mot effect come from relati+ely fe" caue) In ,uantitati+e term: 80% of the
&ro!lem come from 20% of the caue (machine, ra" material, o&erator etc))0 80% of the "ealth i o"ned !y
20% of the &eo&le etc) *herefore effort aimed at the ri#ht 20% can ol+e 80% of the &ro!lem) 1ou!le (!ack to
!ack) Pareto chart can !e ued to com&are (!efore and after( ituation) 2eneral ue, to decide "here to a&&ly initial
effort for ma3imum effect)
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". "asic #ia!am $% P.C.?
* *hin# to look for:
In mot cae, t"o or three cate#orie "ill to"er a!o+e the other) *hee fe" cate#orie "hich account for the !ulk
of the &ro!lem "ill !e the hi#h-im&act &oint on "hich to focu) If in dou!t, follo" thee #uideline:
4) 5ook for a !reak &oint in the cumulati+e &ercenta#e line) *hi &oint occur "here the lo&e of the line
!e#in to flatten out) *he factor under the tee&et &art of the cur+e are the mot im&ortant)
2) If there i not a fairly clear chan#e in the lo&e of the line, look for the factor that make u& at leat 60% of
the &ro!lem) 7ou can al"ay im&ro+e thee fe", redo the Pareto analyi, and dico+er the factor that ha+e
rien to the to& no" that the !i##et one ha+e !een im&ro+ed)
8) If the !ar are all imilar i9e or more than half of the cate#orie are needed to make u& the needed 60%,
try a different !reakdo"n of cate#orie that mi#ht !e more a&&ro&riate)
:ften, one Pareto chart "ill lead to another:
;efore and after chart
-hart that !reak do"n the mot im&ortant factor dico+ered in an earlier chart
-hart that ue different cale, uch a num!er of com&laint and the cot to re&ond, "ith the ame
cate#orie)
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C. Case Stu&' $n P.C.?
* <o" *o -ontruct / Pareto -hart:
/ &areto chart can !e contructed !y e#mentin# the ran#e of the data into #rou& (alo called e#ment, !in or
cate#orie)) .or e3am&le, if your !uine "a in+eti#atin# the delay aociated "ith &rocein# credit card
a&&lication, you could #rou& the data into the follo"in# cate#orie:
=o i#nature
Reidential addre not +alid
=on-le#i!le hand"ritin#
/lready a cutomer
:ther
*he left-ide +ertical a3i of the &areto chart i la!eled .re,uency (the num!er of count for each cate#ory), the
ri#ht-ide +ertical a3i of the &areto chart i the cumulati+e &ercenta#e, and the hori9ontal a3i of the &areto chart i
la!eled "ith the #rou& name of your re&one +aria!le)7ou then determine the num!er of data &oint that reide
"ithin each #rou& and contruct the &areto chart, !ut unlike the !ar chart, the &areto chart i ordered in decendin#
fre,uency ma#nitude) *he #rou& are defined !y the uer
4) 1etermine the cate#orie and the unit for com&arion of the data, uch a fre,uency, cot, or time)
2) *otal the ra" data in each cate#ory, then determine the #rand total !y addin# the total of each cate#ory)
8) Re-order the cate#orie from lar#et to mallet)
>) 1etermine the cumulati+e &ercent of each cate#ory (i)e), the um of each cate#ory &lu all cate#orie that
&recede it in the rank order, di+ided !y the #rand total and multi&lied !y 400))
?) 1ra" and la!el the left-hand +ertical a3i "ith the unit of com&arion, uch a fre,uency, cot or time)
6) 1ra" and la!el the hori9ontal a3i "ith the cate#orie) 5it from left to ri#ht in rank order)
@) 1ra" and la!el the ri#ht-hand +ertical a3i from 0 to 400 &ercent) *he 400 &ercent hould line u& "ith the
#rand total on the left-hand +ertical a3i)
8) ;e#innin# "ith the lar#et cate#ory, dra" in !ar for each cate#ory re&reentin# the total for that cate#ory)
A) 1ra" a line #ra&h !e#innin# at the ri#ht-hand corner of the firt !ar to re&reent the cumulati+e &ercent for
each cate#ory a meaured on the ri#ht-hand a3i)
40) /naly9e the chart) Bually the to& 20% of the cate#orie "ill com&rie rou#hly 80% of the cumulati+e
total)

* *i&:
4) -reate !efore and after com&arion of Pareto chart to ho" im&act of im&ro+ement effort)
2) -ontruct Pareto chart uin# different meaurement cale, fre,uency, cot or time)
8) Pareto chart are ueful di&lay of data for &reentation)
>) Be o!'ecti+e data to &erform Pareto analyi rather than team mem!er o&inion)
?) If there i no clear ditinction !et"een the cate#orie -- if all !ar are rou#hly the ame hei#ht or half of the
cate#orie are re,uired to account for 60 &ercent of the effect --conider or#ani9in# the data in a different
manner and re&eatin# Pareto analyi)
6) Pareto analyi i mot effecti+e "hen the &ro!lem at hand i defined in term of hrinkin# the PV to a
cutomer tar#et) .or e3am&le, reducin# defect or elimination the non-+alue added time in a &roce)
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* Pro!lem:
-ontruct a Pareto dia#ram from the data #i+en in the ta!le !elo")
Cate!o' (e)uenc' Pecent o% total Cumulati*e +
Cron# doe 400 ?0 ?0
Cron# time @0 8? 8?
Cron# medicine 4? @)? A2)?
Cron# &atient 8 > A6)?
Dedicine dc(d > 2 A8)?
Died doe 8 4)? 400
2rand *otal 200 400% 400%
* Eolution "ith the hel& of Pareto di#aram:
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* -oncluion:
*he Pareto &rinci&le u##et that mot effect come from relati+ely fe" caue) In ,uantitati+e term: 80% of the
&ro!lem come from 20% of the caue (machine, ra" material, o&erator etc))0 80% of the "ealth i o"ned !y
20% of the &eo&le etc) *herefore effort aimed at the ri#ht 20% can ol+e 80% of the &ro!lem) 1ou!le (!ack to
!ack) Pareto chart can !e ued to com&are (!efore and after( ituation) 2eneral ue, to decide "here to a&&ly initial
effort for ma3imum effect)
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F G H I J