Pareto Analysis

Jani Saheb Shaik

7 Nov 18
The principle was suggested by Joseph M. Juran.

It was named after the Italian economist Vilfredo Pareto,

Vilfredo Pareto

1848 - 1923
Economist

In the late 1800's, sociopolitical economist

Vilfredo Pareto observed an unequal
distribution of wealth and power in a relatively
small proportion of the total population. 80%
of Italy’s wealth belonged to only 20% of the
population
 What is it?

 The Pareto Principle states that only a "vital few" factors are
responsible for producing most of the problems.

 It is often referred to as the 80-20 rule. 

(80% of the problems can be attributed to 20% of the causes.)
Everyday Examples

Analyze Your Sales :

 80% of your business comes from 20% of your customer
base.

Analyze your productivity:

80% of your accomplishments come from 20% of your
task list.
"A minority of input produces the majority of results."
Analyze customer satisfaction:
 80% of the complaints come from 20% of your customers.

Analyze Production Volume

80% of production volume usually comes from 20% of the producers
Look at Wealth Distribution
 80% of the wealth was in the hands of 20% of the
population.

Analyze Inventory
• 20% of the repair parts normally account for 80
percent of the total inventory
 Analyze Profits
 80% of your profits comes from 20% of your
customers

Analyze Sales & sales staff

80% of sales are attributable to 20% of the sales force.
 Analyze Departmental Issues
 Within your process, 20 percent of the individuals
will cause 80 percent of your headaches.

Analyze your food (Health)-Calories

80% of the calories you consume most likely come from 20% of the
foods you eat.
 Analyze your Meetings
 Only 20% of a meeting's duration results in 80% of its
value.

Analyze your time

20 percent of the people will command 80 percent of
your time.
It is

Effort; 20

Results; 80
 The Pareto Diagram displays, in decreasing
order, the relative contribution of each cause
to the total problem. 

 Relative contribution may be based on

the number of occurrences,
the cost associated with each cause,
or another measure of impact on the problem
How to use it:

1. Gather data on the frequency of the causes using a tally sheet.

 Rank the causes from the most to the least important, and calculate the cumulative percentage
(the cumulative percentage is the first percentage plus the second percentage, and so on).
2. Draw a horizontal axis (X) that represents the different causes, ordered from the most to
least frequent.
3. Draw a vertical axis (Y) with percentages from 0 to 100%.
4. Construct a bar graph based on the percentage of each cause.
5. Construct a line graph of the cumulative percent.
6. Draw a line from 80% on the Y axis to the line graph, and then drop the line down to
the X axis. This line separates the important causes from the trivial ones.
 10
20
30
40
50
60
70
80

0
Defects
Surface Quality
HV Test
Thickness
Bedding Open
Sheath Joint
Sheath Open
Diameter
In-correct Mfg.

Vital Few
Continuity
MBT Tape Break
Insulation Open
Lead Sheath Open
Insulation Resistance
Conductor Resistance
Colour
Core Numbering
Printing
Direction
Defects In Cables

LayLoose (Sheath/
Cable/Core)
Useful Many
Steel Tape Overlap
Conductor Oxidized
Causes

Cable Shape
Embossing Text
Damage (Core/Cable)
Conductor Surface
Overlapped(Cond./
Core/SteelWire)
Cable Break
DrainWire
In-Correct Break
Design
Lengthsheet
Marking
Steel Tape Oxidation
Cumulative%

High Capacitance
Copper
In-correct Continuity
Tape (Input/
DrainWire Below
Drainwire Size)
Polyester
Parameter Wise Non-Conformance

Material Descripancy
Armour Break
Sheath Crack
Armour Gap
Braiding Break
Mica Damage
Cut Off %
0%
20%
40%
60%
80%
100%

[42]

Cumulative %
 Value

1000000
2000000
3000000
4000000
5000000
6000000
7000000

0
Inventory

Copper Rod, 8.00mm

GSW

Vital Few
Tinned Copper

HFFR

PVC(TI1,TI2,TI3,TM1,TM
2,Type 6, Type 9)

XLPE
Useful Many

PE(LDPE,LLDPE,HDPE)
Causes

Mica Tape

PE Master Batches

Copper Tape

Aluminium Mylor Tape

Cumulative%
STORES INVENTORY VALUE

Polyester Tape

PP Filler Yarn

PVC Master Batches

Cut Off %
0%
20%
40%
60%
80%
100%

]42[

Cumulative %
 Frequency of BD

0
10
20
30
40
50
60

DT 2000
MTO 1250
IS - 1
IS - 2
MTO
DTO 1250
IS - 4
RBD
DTO 1600

Vital Few
IS - 3
MWD 8 WIRE
MWD 16 WIRE
BR 24 C
BRAIDING 16C-2
RW 2500
IS - 6
DTO 800
L EXT
DTO 1000
RW 1250
VTP 3
Useful Many

RW - CU
RW - ST
RW 800 - 1
Machines

VTP 1
Maintenance Breakdowns

VTP 2
DTO
DTO 630
DTO 630 - 7
MTO 1600
Frequency of Break Down

VTP 4
DTO 630 - 4
DTO 630 - 6
Cumulative%

PS 600
DTO 630 - 5
MINI PACK 240
DTO 630 - 3
DTO 630 - 8
DTO 630 - 10
DTO 630 - 2
RW 800 - 2
DTO 630 -1
IS - 5
Cut Off %

MIDI PACK 400

PS 200
DT 2001
0%
20%
40%
60%
80%
100%

[42]

Cumulative %
Prepare Pareto chart

1. Gather data on the frequency of the causes using a tally sheet.

Defect Frequency
1 Cooking & Washing (Food) 3.5
2 Cloth washing & Ironing 2
3 Teaching Children 1
4 Watching TV 2
5 Vacuuming house 0.5
6 Reading 0.5
7 Shopping 0.5
8 Chat with friends 0.5
9 Fighting with husband 0.20
10 Physical Exercise 0.45
 This
column
Arrange the Data in the Descending order
  Activity Time (Hrs) spent in a day
(Excluding Sleep at night)
1 Cooking & Washing (Food) 3.5
2 Cloth washing & Ironing 2
3 Watching TV 2
4 Teaching Children 1
5 Vacuuming house 0.5
6 Reading 0.5
7 Shopping 0.5
8 Chat with friends 0.5
9 Physical Exercise 0.45
10 Fighting with husband 0.2
 This
column
Find % of each item’s contribution

  Activity Time (Hrs) spent in a % of each

day (Excluding Sleep
at night)
1 Cooking & Washing (Food) 3.5 31.4
2 Cloth washing & Ironing 2 17.9
3 Watching TV 2 17.9
4 Teaching Children 1 9.0
5 Vacuuming house 0.5 4.5
6 Reading 0.5 4.5
7 Shopping 0.5 4.5
8 Chat with friends 0.5 4.5
9 Physical Exercise 0.45 4.0
10 Fighting with husband 0.2 1.8
Total 11.15 100
 This
 Find cumulative %
column

1 2 3 4 5
  Activity Time (Hrs) spent in a % of each Cumulative
day (Excluding Sleep %
at night)
1 Cooking & Washing 3.5 31.4
(Food) 31.4
2 Cloth washing & Ironing 2 17.9 49.3
3 Watching TV 2 17.9 67.3
4 Teaching Children 1 9.0 76.2
5 Vacuuming house 0.5 4.5 80.7
6 Reading 0.5 4.5 85.2
7 Shopping 0.5 4.5 89.7
8 Chat with friends 0.5 4.5 94.2
9 Physical Exercise 0.45 4.0 98.2
10 Fighting with husband 0.2 1.8 100.0
Total 11.15 100
 10.0
15.0
20.0
25.0
30.0
35.0

0.0
5.0
Cooking & Washing ...

Cloth washing & Iro...

Watching TV

Teaching Children

Vacuuming house

Reading
% Time consumption

Shopping

Chat with friends

Physical Exercise

Fighting with husband

% Of contribution
Time For Exercise