Bob Luttman, Robert Luttman & Associates
Pareto Analysis
Pareto analysis is based on the premise that 80% of problems are due to 20% of the possible causes. These 20% are the "vital few" problems a process improvement focuses on. A Pareto analysis is a sorted histogram with two features added. One, is the cumulative distribution curve. Second, the vital few are identified.
Construction:
1. Sort data in descending order of importance
2. Calculate individual percentages for each category
3. Calculate cumulative percentages for each category
+ First data point
Cumulative = Individual
+ Rest of data points
Cumulative = Sum of Individual %'s up to and including current point
4. All categories with cumulative %'s less than or equal t80% are the "significant few" and worthy of further review
Pareto analysis data
Pareto Histogram
