A Pareto chart is a type of chart that contains both bars and a

line graph In the mathematical discipline of graph theory, the line graph of an undirected graph is another graph that represents the adjacencies between edges of . is constructed in the following way: for each edge in , make a vertex in ; for every ...

, where individual values are represented in descending order by bars, and the cumulative total is represented by the line. The chart is named for the

Pareto principle The Pareto principle states that for many outcomes, roughly 80% of consequences come from 20% of causes (the "vital few"). Other names for this principle are the 80/20 rule, the law of the vital few, or the principle of factor sparsity. Manag ...

, which, in turn, derives its name from

Vilfredo Pareto Vilfredo Federico Damaso Pareto ( , , , ; born Wilfried Fritz Pareto; 15 July 1848 – 19 August 1923) was an Italians, Italian polymath (civil engineer, sociologist, economist, political scientist, and philosopher). He made several important ...

, a noted Italian economist.

Description

The left vertical axis is the frequency of occurrence, but it can alternatively represent cost or another important unit of measure. The right vertical axis is the cumulative percentage of the total number of occurrences, total cost, or total of the particular unit of measure. Because the values are in decreasing order, the cumulative function is a

concave function In mathematics, a concave function is the negative of a convex function. A concave function is also synonymously called concave downwards, concave down, convex upwards, convex cap, or upper convex. Definition A real-valued function f on an ...

. To take the example below, in order to lower the amount of late arrivals by 78%, it is sufficient to solve the first three issues. The purpose of the Pareto chart is to highlight the most important among a (typically large) set of factors. In

quality control Quality control (QC) is a process by which entities review the quality of all factors involved in production. ISO 9000 defines quality control as "a part of quality management focused on fulfilling quality requirements". This approach place ...

, Pareto charts are useful to find the defects to prioritize in order to observe the greatest overall improvement. It often represents the most common sources of defects, the highest occurring type of defect, or the most frequent reasons for customer complaints, and so on. Wilkinson (2006) devised an algorithm for producing statistically based acceptance limits (similar to

confidence interval In frequentist statistics, a confidence interval (CI) is a range of estimates for an unknown parameter. A confidence interval is computed at a designated ''confidence level''; the 95% confidence level is most common, but other levels, such as 9 ...

s) for each bar in the Pareto chart. These charts can be generated by simple

spreadsheet A spreadsheet is a computer application for computation, organization, analysis and storage of data in tabular form. Spreadsheets were developed as computerized analogs of paper accounting worksheets. The program operates on data entered in ...

programs, specialized statistical software tools, and online quality charts generators. The Pareto chart is one of the seven basic tools of quality control.

Description

See also

References

Further reading