Pareto ANALYSIS
Prepared to : Puan Rokiah Muda Prepared by : Ahmad Firdaus Bin S. Johary Amarul Hanif Bin Harun Munzir B. Abd Rahman 2010669076 2010210806 2010826444
Founder of Pareto Analysis
In 1879, the famous Italian economist Alfred Pareto, noticed that 80% of Italys wealth was controlled by 20% of the population. This concept is known as Paretos Law or Paretos Rule or Pareto Principle or Principle of imbalance or simply The 80/20 Rule. He coined the term vital few and useful many.
Vilfredo Pareto 1848 - 1923
Dr. Joseph Juran also recognized this concept as universal that could be applied to many fields. He change the term to vital few and trivial many.
Vital Few
Trivial Many
Definition
Pareto Analysis is a simple technique for prioritizing possible changes by identifying the problems that will be resolved by making these changes. By using this approach, you can prioritize the individual changes that will most improve the situation. Concept
Examples of Pareto Principle / 80:20 Rule
80% of customer complaints rise from 20% of products or services. 20% of product or services account for 80% of profit. 20% of criminals in UK account for 80% of the crime. 80% of the delays in process come from 20% of possible causes.
Input
Output
Cause
Effect
Efforts
Result
Example of Pareto Analysis
Awang work as a quality control manager at a door
manufacturing company. He want to maximize customer satisfaction by minimize defects of door sold.
Wooden glass doors are produced on a six day work week. At final checkout before shipping, the doors are inspected
and each is classified as conforming or non-conforming and specific defects are identified for each nonconforming door.
Door Defects Defined
Window: Window misaligned Discolor: Discolor Handle: Handle hole missing Hinges: Hinges wrong Rough: Rough wood Glass: Broken glass Warped: Warped
Day
1 2 3 4 5 6 8 9 10 11 12 13 15 16 17 18 19 20 22 23 24 25 26 27 29 30
Defects Detected Each Day
Window 1 Discolor 3 Handle 2 2 3 2 1 1 5 1 Hinges 2 1 1 2 4 1 2 3 4 4 2 Rough 7 2 4 1 Glass 1 3 4 1 1 3 2 4 1 Warped 4 3 1 1 1
3 1 2
1 2 1 1
2 1
2 6 3
2 1 3 2
1
1 2 3 2 3 2 3 4 3 3 2 5 1 2 1
2 2 2 1
2 2
31 Total
24
28
60
24
12
14
Using the Data from the
Defects Detected Per Day Slide and the Blank Graph in your Notes, make up a Pareto Frequency Chart (a Bar Chart Format) with the:
Highest Frequency /
Tallest Bar on the Left, &
Lowest Frequency /
Shortest Bar on the Right.
Frequency of Defects Table
Data Sorted to Frequency Sequence
Frequency Bar Chart 1
# Data Converted to Bar Chart
Create the Pareto Curve for the Door Defects
#
%
1. Convert the Number of each fault to a % of total Defects & calculate the Cumulative % of Defects.
2. Create a Bar Chart that Show the % of Individual Defects (Tallest on the Left) AND
3. Include the Cumulative % of the Defects in the Chart THEN 4. Draw a line that joins the tops of each of the Cumulative % Bars (That Curved Line is the Pareto Curve
Frequency of Defects Table + Individual & Cumulative Percentage
Pareto Frequency Chart % of Defects & Pareto Curve
QUESTION?
Are the Hinges the
MOST IMPORTANT Problem to be solved??
YES?
or NO?
NO!
It is the Most Frequent problem - but we can not be sure if it the most important until we take into account Other Variables
Another Variable To Consider!
We know the Most
Frequent Fault but to get a firm base for a Decision we need to consider another key Variable .
The COST to fix each Fault.
Pareto Cost Data
A Pareto Diagram can display the costs of various defects, in order, so you can focus attention on the most important problems. ASSUME the following costs for each of type of defect.
We now know Hinges are the
MOST FREQUENT fault ! AND
We also know that Warped are
the MOST EXPENSIVE fult
SO You tell me Which is the MOST IMPORTANT fault to fix FIRST!
Comparison of Cost & Frequency of Each Defect
Cumulative Cost Percentage of Faults
Cum % of Costs
120%
100%
100%
81%
80%
67%
60%
40%
29%
20%
100%
43% 57% 71%
Discolour
86%
Handle
0% Hinges Warped Glass Rough Window
Application to Industry
Refer to Case Study
The Influence of Oak Timber Defects On Decorative Veneer Cutting
