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268 C o n t i n u o u s I m p r o v e m e n t D e f i n e S t a g e 269
Pareto Diagrams
A Pareto diagram is another useful tool for focusing the project scope,
particularly as applied to the unique categories obtained using the work
breakdown structures.
Pareto analysis is the process of ranking opportunities to deter
mine which of many potential opportunities should be pursued first.
It is also known as “separating the vital few from the trivial many.”
Pareto analysis should be used at various stages in quality improve
ment to determine the next step. Pareto analysis is used to answer such
questions as “What department should have the next project improve
ment team?” or “On what type of defect should we concentrate our
efforts?”
The following steps are recommended to perform a Pareto analysis:
1. Determine the classifications (Pareto categories) for the graph.
If the desired information does not exist, obtain it by designing
check sheets and log sheets.
2. Select a time interval for analysis. The interval should be long
enough to be representative of typical performance.
3. Determine the total occurrences (i.e., cost, defect counts, etc.)
for each category. Also determine the grand total. If there are
several categories that account for only a small part of the total,
group these into a category called “other.”
4. Compute the percentage for each category by dividing the cate
gory total by the grand total and multiplying by 100.
5. Rank order the categories from the largest total occurrences to the
smallest.
6. Compute the “cumulative percentage” by adding the percentage
for each category to that of any preceding categories.
7. Construct a chart with the left vertical axis scaled from 0 to at
least the grand total. Put an appropriate label on the axis. Scale
the right vertical axis from 0 to 100 percent, with 100 percent on
the right side being the same height as the grand total on the
left side.
8. Label the horizontal axis with the category names. The leftmost
category should be the largest, the next category the second largest,
and so on.
9. Draw in bars representing the amount of each category. The height
of the bar is determined by the left vertical axis.
10. Draw a line that shows the cumulative percentage column of the
Pareto analysis table. The cumulative percentage line is determined
by the right vertical axis.
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