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This document discusses Pareto analysis, which is a technique for prioritizing changes by identifying problems that will resolve the most issues. It provides an example of a door manufacturing company using Pareto analysis to identify the most common defects. The company tracked defects detected over 30 days and found that "hinges" was the most frequent defect, occurring 60 times. However, when cost data is considered, "warped" doors are actually the most expensive defect to fix. Therefore, "warped" doors should be the highest priority problem to address first.

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Daoishio Manabu
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37 views26 pages

Complete Slide

This document discusses Pareto analysis, which is a technique for prioritizing changes by identifying problems that will resolve the most issues. It provides an example of a door manufacturing company using Pareto analysis to identify the most common defects. The company tracked defects detected over 30 days and found that "hinges" was the most frequent defect, occurring 60 times. However, when cost data is considered, "warped" doors are actually the most expensive defect to fix. Therefore, "warped" doors should be the highest priority problem to address first.

Uploaded by

Daoishio Manabu
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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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

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