STATISTICS

P A R E T O ’ S
C H A R T
 WHAT IS PARETO´S CHART?

Named after the Italian economist Vilfredo Pareto, is

a specific type of vertical bar chart used to prioritize
and display the most significant factors in a dataset.
It's a visual representation of the Pareto principle,
which states that roughly 80% of the effects come
from 20% of the causes. The chart combines both bar
and line graphs to highlight this principle.
Here's how a Pareto chart
works and its usefulness!
Technique:
1. Data Collection: Gather data on a specific issue, problem, or set of factors.
2. Data Sorting: Organize the data in descending order, typically by frequency, impact, or
most significant factor on the left.
3. Bar Chart: Create a bar chart with each bar representing a factor or category. The heigh
corresponds to the frequency or impact of each factor.
4. Cumulative Percentage Line: Superimpose a line graph on the same chart to represent the
percentage. This line starts at 0% and rises as you move from left to right, showing the cu
contribution of factors.
5. Highlight the 80/20 Rule: The Pareto chart visually highlights the point at which the cumu
crosses the 80% mark, which corresponds to the most significant factors.
 USEFULNESS
Quality Control: In quality management and process improvement,
Pareto charts are used to pinpoint the main sources of defects or problems.

Decision-Making: They assist in making informed decisions about

where to allocate resources, time, or effort. By concentrating on
the vital few factors, you can achieve the most significant
improvements.

Identifying Priorities: They help you quickly identify and focus

on the most critical issues or causes that have the greatest
impact or occur most frequently.
 USEFULNESS
Root Cause Analysis: They are valuable in root cause analysis, helping to
determine the key factors leading to a problem.

Project Management: Pareto charts can guide project managers in

prioritizing tasks and addressing the most influential project issues.

Continuous Improvement: In lean manufacturing and continuous

improvement efforts, Pareto charts are a fundamental tool for focusing
on improvements where they matter most.
 What tools can be
used to create it?
Creating a Pareto chart is relatively simple, and there are various tools and software applications
available to help you generate Pareto charts. Here are some options:

1. Microsoft Excel: . Here's how to do it:

Enter your data into an Excel spreadsheet.
Select the data you want to include in the chart.
Go to the "Insert" tab and choose "Bar Chart." From there, select "Clustered Bar" or
"Stacked Bar."
You can then add a secondary vertical axis and convert one series into a line graph to
represent the cumulative percentage.
Steps to Make a Pareto Chart
 Other tools
2. Google Sheets

3. Online Pareto Chart Generators:

OnlineChartTool: Online Pareto Chart Generator
Canva: Pareto Chart Templates
QI Macros for Excel (paid tool but offers a free trial): QI Macros

4. Business Intelligence (BI) Software

5. Specialized Statistical Software

 types of variables we can analyze
and examples
Qualitative data
Can be used to categorize and Quantitative data
prioritize the reasons students are Student test scores.
absent from school.
Student age.
Types of discipline incidents in a
Number of students.
school.
Teachers salaries.
Qualitative feedback on teacher
performance. Classroom size.
Categorize the specific special Average daily attendance.
education needs of students.
Student learning preferences.
 EXAMPLE
For our example we looked for an attendance problem that occured in a
school. We took a sample of the absences presented in a month and
asked what the cause was. And we have the results:
Transportation problems: 15%
Disease: 25%
Lack of motivation: 20%
Extracurricular activities: 30%
Family problems 10%
C O N C L U S I O N
PARETO CHART IS A POWERFUL VISUAL TOOL FOR DATA
ANALYSIS THAT HELPS ORGANIZATIONS .

INDIVIDUALS CONCENTRATE THEIR EFFORTS ON THE

MOST SIGNIFICANT FACTORS CONTRIBUTING TO A
PROBLEM OR DESIRED OUTCOME.

A PARETO´S CHART PROVIDES YOU WITH VALUABLE

CONCLUSIONS ABOUT THE CAUSES OR REASONS FOR A
PROBLEM.