Abstract

Pareto analysis helps differentiate the “vital few” improvement opportunities from the “trivial many” by distinguishing between categories with different frequencies of occurrence. One shortcoming of Pareto analysis is the omission of a test for statistical significance. Many practitioners, therefore, construct a Pareto chart and subjectively identify the vital few categories on which to focus. The authors provide a simple approach to remove the subjectivity from these analyses by identifying the categories that have a statistically significant frequency of occurrence.