Page 334 - Six Sigma Demystified

314 Six SigMa DemystifieD

vertical bars represent mutually exclusive categories of interest. The catego-
ries are sorted in decreasing order from left to right in the Pareto diagram
based on the value of the metric displayed in the y axis, either by count or by
cost.

When to Use

Pareto charts provide a guide to selecting opportunities by differentiating be-
tween the vital few and the trivial many. They are typically used to prioritize
competing or conflicting “problems” so that resources are allocated to the most
significant areas. In general, though, they can be used to determine which of
several classifications have the most count or cost associated with them, for
instance, the number of people using the various ATMs versus each of the in-
door teller locations or the profit generated from each of 20 product lines. The
important limitations are that the data must be in terms of either counts or
costs. The data cannot be in terms that can’t be added, such as percent yields
or error rates.

Define Stage and Analyze Stage

• To focus project resources on the products, departments, issues, defects,
or causes yielding the highest return

Methodology

Choose the categories (or problem areas) for which to collect data by brain-

storming, or use existing data to look for these problem areas. The data you
analyze must be counts (attributes data) or costs, and the data must be additive.
Data as yields or percentages cannot be added, so they are inappropriate for
Pareto analysis. You also should decide the time period over which the data
should be collected.
The left vertical axis of the Pareto chart has counts or costs, depending on
the data used. Each vertical bar represents the contribution to the total from a
given problem area. The bars are placed on the graph in rank order: The bar at
the left has the highest contribution to counts or costs. The right vertical axis
has percent demarcations. A cumulative line is used to add the percentages
from each bar, starting at the left (highest cost or count) bar.