EMQM 5103

- Pareto Chart

PRESENTATION BY;
MOHD. NORIZAM MD. SALLEH
IC NO: 670703-01-6045
STUDENT ID:CGS00534317

LECTURER;
DR HARIKRISHNAN KANTHEN

 
 INTRODUCTIO
N
 In 1879, the famous Italian economist
Vilfredo Federico Damaso Pareto, noticed
through studies that 80% of Italy’s wealth
was controlled by 20% of the population.
He is also an engineer, sociologist and
philosopher

 Subsequently, people in various disciplines

and professions noticed that the same
80/20 rules can be applied in a broader
way, to a wide range of phenomena. Dr.
Joseph Juran then generalized this concept
to many fields. He used the term vital few
and trival many.
PARETO CHART USES PARETO PRINCIPLE.

IT’S A ‘GREAT” MANAGEMENT TOOL ..

THAT
ALSO KNOWN AS FOLLOWS;

 The “Pareto Principle”

 “The Law of The Vital Few
and the Trivial Many”
 The “Power Law”
 “Participation Inequality”
 The “80 – 20 Rule”
 ABC Analysis Technique
THE PARETO PRINCIPLE
–
THE 80 – 20 RULE

The 
VITAL FEW
 EXAMPLES OF
PARETO PRINCIPLE / 80 – 20
RULE

Input Output

Cause Effect

Efforts Products
PARETO CURVE CHART
EXAMPLE
“DOOR DEFECTS”
DEFINED
 Window: Window misaligned
 Discolor: Discolor
 Handle: Handle hole missing
 Hinges: Hinges wrong
 Rough: Rough wood
 Glass: Broken glass
 Warped: Warped
ONE MONTH DOORS FAULT/ DEFECTS RECORD
Day  Defects Detected Each Day
Window Discolor Handle Hinges Rough Glass Warped 
1 1 3   2 7 1 4
2     2   2 3 3
3     2 1 4 4 1
4 2 3 3 1 1 1 1
5   1   2      
6   2 2 4   1 1
8 1   1  1 3     
9     1  2      
10   2    3 2     
11     5        
12   1 1 4 4 1  
13 1      4      
15       2      
16         2    
17   2  2    1    
18   1          
19       6 3     
20       3 2    
22   2 1        
23       3      
24     1 2     1
25   2 2 3 2 1 2
26 1 2 3 4      
27   2   3  2   1
29   1  2  3      
30       2      
31       5      
Total 6 24 28 60 24 12 14
CREATE THE “PARETO CHART” FOR
THE DOOR FREQUENCY DEFECTS
 The Steps =

Convert the “Number” of each faulty to

#
1.

% of total Defects & calculate the

“Cumulative %” of Defects.

2. Create a Bar Chart that Show the % of

Individual Defects (Tallest on the Left –
Descending formation) AND

% 3. Include the Cumulative % of the Defects

in the Chart THEN

4. Draw a line that joins the tops of each

Cumulative % “Bars” (That “Curved Line”
is the “Pareto Curve”
“PARETO “FREQUENCY OF
DEFECTS”
 PARETO % DEFECTS FREQUENCY
 # of  Defects CHART
PARETO % DEFECTS FREQUENCY, CUMULATIVE %
CURVE & VITAL FEW (FOR # DEFECT/FAULT) CHART.
QUESTION?
 Are the “Hinges, handle & rough” the MOST
IMPORTANT Problems to be eliminated??
 YES? or NO?

 NO!

 Do they the ”Vital Few”??? - We can not be

sure until we take into account “Other
Variables”. What is it ???

- The total cost to fix each Fault!

 PARETO CHART (INCLUDES
COST)

 TheMOST IMPORTANT fault/defects to be

corrected cannot be identified from the
Pareto Chart produced using the frequency
data alone!!!
 Theforewe need to consider the total cost
required to eliminate each defect!!!
For Total Cost Pareto Chart - same process
will be applied.
 PARETO TOTAL COST CHART

This Diagram can display the costs of various faults/

defects, so we can focus our attention on the most
important problems.  
- To eliminate the most expensive faults.

ASSUME the following costs are the cost to repair each

type of defect;
COMPARISON OF COST OF EACH
DEFECT & DEFECT FREQUENCY %
 “CUMULATIVE COST OF
FAULTS”
PARETO CHART - TOTAL COSTS %
DEFECTS
PARETO % TOTAL COST DEFECTS,
CUMULATIVE % CURVE & VITAL FEW (TOTAL
COST) CHART
 CONCLUSION
Pareto charts are used to identify and prioritize
problems to be solved. In this case hinges, warped
& glass faults need to be eliminated first as they
are the actual vital few!!! for this case.
Eliminated them, 80% of the problem solved
Pareto Chart – Helps to identify priorities.
Remember the 80/20 rule states that APPROXIMATELY
80% of the problems are created by APPROXIMATELY
20% of the causes.
THANK YOU