Abstract

While many companies train employees in quality and encourage the use of quality tools, they must also work to minimize the risk that such tools will be used inappropriately. Pareto analysis represents one of the basic tools of quality. Pareto charts are easy to construct and interpret, and offer insights for process improvement and problem solving. Pareto charts typically show the frequency of occurrence of a variable of interest in different categories arranged in order of descending frequency. The focus is generally on the category that has the highest frequency of occurrence, but in some cases, this typical frequency-based portrait of data is not appropriate. Focusing on the frequency of occurrence of an event is appropriate when the degree of importance is the same for all categories and when the potential for occurrence is the same for all categories. When the frequency approach is not appropriate, the procedure to be used depends on which of these two conditions is not satisfied. If the degree of importance is not equal for all categories, a useful approach is to weight the frequencies in each category by a measure reflecting the degree of importance for that category. If the potential for occurrence is not equal for all categories, dividing the number of frequencies by the number of pieces produced, as in a manufacturing example, offers the rate of occurrence and provides useful information. If both the degree of importance and the potential for occurrence differ among categories, a combination of the two preceding approaches may be used. In order to supercharge a Pareto analysis, the analysis must be structured to focus attention on the most important cases or categories of occurrences. This requires a preliminary analysis to discover whether the degree of importance is the same for all categories and if the potential for occurrence is the same.