Pareto Analysis

Pareto is a statistical tool used frequently in quality or Six Sigma Projects, to select a few tasks that produce a major effect. It’s also known as 80/20 rule, based on the idea, that 20% of efforts generate 80% of the benefit or another explanation it would be, 20% of the defects cause 80% of its problem. The Pareto-Chart can be used, in very well-defined situations, because of their simplicity of analysis. The chart includes no more than two types of data, for example, defects-number of defects, breakdown causes-time, etc.

I thought that a practical example would be helpful, so let’s begin.
I show you how to sort out the data to get the Pareto Chart and how to interpret the result.

First, determine the result type, in which you are interested. Many options are available, such as number of complaints, duration of breakdowns or setups, number of scrap parts, etc. The next step is to export the data from a database, then filter it and use it for your purpose. In the most performant database systems, the Pareto along with other statistical tools are incorporated, so in this way, it’s easier to get the desired result.
The next table is the base for this analysis, which contains information about the production line’s breakdown.

As you can see, the table contains a lot of information, but in this case, we’re interested in the categories ‘Problem definition’ and ‘Duration’.
The goal is to identify the critical problems of the breakdowns in terms of time. The minutes from the same categories will be accumulated, as results in the following table.

Now we add 2 more columns Cumulative and the Percentage, by the way, the second column we need for the curve axis of the chart. Sort the ‘Duration’ column descending, from the largest value to the smallest. Then copy the first number 210 in the Cumulative column and add one by one the numbers from the Duration column.
The Percentage= Cumulative number/ 730 (last number from Cumulative column)
After calculation comes the fun part, creating the chart using columns 1,2,4. Microsoft Excel has already a predefined chart called Combo and is perfect for what we are going to do.
Last, you draw a horizontal line (orange) from the value 80% on the left side of the chart intersecting the curved axis (green), then from this common point draw a vertical one until the bottom. On the left side from the (orange) line are separated the most important causes.

The example discussed in this article you can download from here.

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