Managing for Quality
Pareto Charts
Yonatan Reshef

The use of Pareto charts has given rise to the "80-20" rule, which suggests that 80 percent of an organization's problems come from 20 percent of its tasks. Constructing a Pareto chart requires nine steps:


    1. Use a check sheet or "brainstorm" to obtain data.


    2. Arrange the data in order from the largest category to the smallest.


    3. Calculate the total.


    4. Compute the percentage of the total that each category represents.


    5. Compute the cumulative percentage.


    6. Scale the vertical axis for frequencies (zero to total).


    7. From left to right, construct a bar for each category, with height indicating the frequency. Start with the largest category and add them in descending order (combine the categories containing the fewest items into an "other" category and put it on the extreme right, as the last bar).


    8. Draw a vertical scale on the right and add a percentage (0 to 100 percent scale).


    9. Plot a cumulative-percentage line.


    10. The most frequent event is not always the most important. Always ask: What has the most impact on the goals of our business and customers?



Here is another example (https://www.spcforexcel.com/knowledge/bar-charts/pareto-diagrams)



The Pareto diagram in this figure shows the reasons for consumer complaints (total = 9466) against U.S. airlines in 2002.  Each bar on the chart represents the frequency with which each complaint was received.  The major complaint was for flight problems (cancellations, delays and other deviations from schedule).  The second largest complaint was for customer service (rude or unhelpful employees, inadequate meals or cabin service, treatment of delayed passengers).

The line on the Pareto diagram is called a cumulative line. This line gives the cumulative percentage.  Flight problems account for 21.5% of the complaints.  Flight problems and customer service account for 40% of the complaints. The top three complaint categories account for 55% of the complaints.  So, if the airlines want to reduce the number of complaints, they need to work on flight delays, customer service, and baggage problems.