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PARETO CHART VIEWGRAPH 1 What Is a Pareto Chart? Bar chart arranged in descending order of height from left to right Bars on left relatively more important than those on right Separates the "vital few" from the "trivial many" (Pareto Principle) PARETO CHART VIEWGRAPH 2 Why Use a Pareto Chart? Breaks big problem into smaller pieces Identifies most significant factors Shows where to focus efforts Allows better use of limited resources PARETO CHART VIEWGRAPH 3 Constructing a Pareto Chart Step 1 - Record the data Step 2 - Order the data Step 3 - Label the vertical axis Step 4 - Label the horizontal axis Step 5 - Plot the bars PARETO CHART VIEWGRAPH 4 Constructing a Pareto Chart Step 6 - Add up the counts Step 7 - Add a cumulative line Step 8 - Add title, legend, and date Step 9 - Analyze the diagram PARETO CHART VIEWGRAPH 5 Analysis Sheet Example Outstanding Debts Category Amount (\$) School tuition (monthly installments) 2,030 Visa 2,007 2,000 Church pledge (monthly installments) 1,983 Mastercard Balance of car loan 1,971 Home improvement loan balance 1,956 Total 11,947 PARETO CHART VIEWGRAPH 6 Pareto Chart Example Outstanding Debts LEGEND: AMOUNT OWED ON OUTSTANDING DEBTS AS OF 12 FEB 95. 1,200 2,400 3,600 4,800 6,000 7,200 8,400 9,600 10,800 12,000 Tuition Visa Church MC Car Home Type of Debt Amount Owed \$ PARETO CHART VIEWGRAPH 7 Analysis Sheet Example Interest Rates on Outstanding Debts Category Int. Rate (%) Mastercard Home improvement loan balance School tuition (monthly installments) Visa Balance of car loan 21 18 9 2 Church pledge (monthly installments) 1 6 PARETO CHART... View Full Document

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