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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.








          13_Pyzdek_Ch13_p265-292.indd   269                                                            11/9/12   5:14 PM
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