MSG Team's other articles

9265 Why Facebook Wants To Be Regulated?

The recent Cambridge Analytica scandal has ended up putting companies like Facebook in hot water. The common man has now become aware of the fact that companies like Facebook have access to a lot of personal data. They have also become aware of the possibility that Facebook could use let third parties access some of […]

11935 Why are Wages Not Rising in America?

Most Americans earn their income in the form of wages rather than in the form of investment income from shares, bonds or real estate. It is therefore important for the people of America that the wages keep increasing in proportion to productivity. However, this has not been the case. The average American worker has stagnant […]

11297 Role of Project Champion in Six Sigma Project

The Project Champion is the person responsible for identifying the Six Sigma Project and making it an organization reality. The role of this kingpin in the conception and execution of the Six Sigma project has been detailed in this article. Stage at Which Required The Project Champion is required at very early stages of the […]

9301 Do Farm Loan Waivers and Bank Bailouts Make for Sound Economic and Fiscal Policies?

Farm Loan Waivers, Bank Bailouts, and Moral Hazards Farm Loan Waivers are the Flavor of the Season as Indian States take turns indulging in a game of who waives the maximum loans taken by the farmers. Indeed, with elections approaching, a form of Competitive Populism has begun wherein each political party is trying to outdo […]

12055 World Class Manufacturing – Meaning and its Principles

Introduction Manufacturing has evolved considerably since the advent of industrial revolution. In current global and competitive age, it is very important for organization to have manufacturing practice which is lean, efficient, cost-effective and flexible. World class manufacturing is a collection of concepts, which set standard for production and manufacturing for another organization to follow. Japanese […]

Search with tags

  • No tags available.

How to Create a Pareto Chart ?

A Pareto chart is one of the 7 basic tools of quality control. It is for this reason that every student of quality management needs to know how to prepare and how to read a quality chart. The procedure for the same has been listed below:

Step 1: Find the Causes

The process starts with finding the underlying causes. The “could be” causes to positive effects like revenues or profits of a company and will therefore need to be maximized. Alternatively these could be the causes of negative effects like losses or defects and will then need to be minimized.

Step 2: Prepare a Frequency Table

Once the underlying causes have been listed down, they need to be checked for their importance. This can be done by running simulations of the process several times and recording the outcomes. A frequency table is one of the best ways to do so. Most managers prefer to have a cumulative frequency column.

Step 3: Convert it into Percentages

Once there is sufficient data to understand the importance of the underlying causes on the process and a frequency table has been created, it’s time to convert the numbers into percentages. This is because percentages are intuitively easier to understand than regular numbers.

Step 4: Arrange in Descending Order

Last but not the least it’s time to arrange the causes. The most important ones must be at the top while the least important ones must be at the bottom of the table. Thus the arrangement must be in descending order. Also once must ensure that the percentages are also cumulatively taken track of. The causes that come before cumulative percentage 80% in reached are usually considered the vital few factors. This arrangement makes it easy for the naked eye to understand the important factors and make necessary changes to achieve desired results.

How to Read a Pareto Chart ?

The above example gives you the results of Pareto Principle in a tabular form. In case you need the same in graphical form, you will need to understand how to create and read a Pareto chart. A Pareto chart may be confusing because it shows both the individual as well as the cumulative data. Here is how to read or prepare a Pareto chart:

Read The Bar Charts For Individual Values

The Bar charts that are connected to the X axis are prepared in descending order. These bars represent the most important factors and gives the user an chance to understand their individual values.

Read The Line For Cumulative Value

The line at the top of the bars shows cumulative values. This gives the user a chance to understand the cumulative values.

Thus the user can simultaneously look at individual values and cumulative values. This helps them easily separate the “vital few” from the “trivial many”.

Article Written by

MSG Team

An insightful writer passionate about sharing expertise, trends, and tips, dedicated to inspiring and informing readers through engaging and thoughtful content.

Leave a reply

Your email address will not be published. Required fields are marked *

Related Articles

Creating a SIPOC Chart

MSG Team

Check Sheet – A Basic Six Sigma Tool

MSG Team

Challenges Faced in Conducting Voice of Customer Exercise

MSG Team