7QC Tools — Pareto Chart, How to Prioritize Your Work?Amrendra Roy
Pareto Principle: It has been found that 80% of the trouble (defects) are because of 20% of the reasons. Hence, 6sigma or continuous improvement program focuses on controlling these 20% of the causes so that 80% of the defects are under control. This helps in setting the priority (focus area) for a 6sigma project.
We have seen that the histogram provides the frequency (number of observations) in a given class. However, the classes are not arranged in descending order.
If the bars of a histogram are arranged in descending order of the frequency then that type of sorted histogram is called as Pareto Chart. Also, cumulative frequency is also plotted along with the frequency on the Pareto Chart.
In above example, if we can control reasons C, D and G then we can reduce the failures by 82% (see cumulative frequency).
Hence, Pareto Chart helps you in simplifying the bigger problem by identifying the vital few significant variables and enables you identify the focus on them with your limited resources.
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