Pareto Chart: Overview, Questions, Preparation

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This chapter has multiple topics listed below:

Statistics Standard Deviation Correlation Bar Graph Chi Square Test Measures of Central Tendency Variance Extrapolation Null Hypothesis Pareto Chart Harmonic Mean How to find Median Statistics Definition Data Collection Methods Frequency Polygons Central Tendency Confidence Interval Data Handling Statistical Inference Quota Sampling Interquartile Range Quartiles Variance and Standard deviation Cluster Analysis Correlation and Regression Graphical Representation Least Square Method Level of Significance Paired T Test Z Score Table Assumed Mean Method Box and Whisker Plot Gamma Distribution Sample Size T Distribution Tests of Significance Types of Statistics Continuous Variable Sample Statistic Exponential Smoothing T Test Table Bivariate Analysis Relative Frequency Difference between Average and ...Difference between Mean and Med...Difference between Parametric a...Grouping data Statistics pdf Mean Absolute Deviation Population and Sample

Rachit Kumar SaxenaManager-Editorial

Updated on Aug 13, 2021 14:11 IST

Table of Contents

What is Pareto chart?
Weightage of the Pareto Chart
Illustrative Examples on Pareto Chart
FAQs on Pareto chart

What is Pareto chart?

We have studied both bar and line graphs in statistics, but we also have a Pareto chart topic. A Pareto chart is also used to analyse or represent the data set, but it is formed when combining both line and bar graphs. Every bar in the chart represents an issue or a defect.

Here is an example of the Pareto chart to analyse customers’ feedback for a food court based on 4 things.

Applications of Pareto Chart

Pareto chart is mostly in the large scale industries and organisations to analyse the bulk of data. Some applications of the Pareto Chart are:

It examines the global issues and helps in grabbing attention for rectifying the major issues first.
For the yearly analysis of population growth of a country/ state/ district.
To describe the set of bulk data that you have for other people.
For surveying the organisation's revenue growth over a certain time period.

Certain operations for the grouped involved in the chapter are:

Mean
Mode
Median

Weightage of the Pareto Chart

Pareto chart is a topic of Statistics. The chapter Statistics has its importance in class X and class XI; its applications greatly impact various competitive exams. The weightage of statistics in class X and class XI maths exams ranges from 5 to 6 marks.

Apart from the Pareto chart, there are also other graphical representations like a bar graph, line graph. The graphical representation helps in screening or analyzing the grouped data of an organisation, institute, etc. The operations of grouped data are also a part of the chapter.

Illustrative Examples on Pareto Chart

1. Suppose we want to analyse the data of defects on four types of defects complained by the customers, then draw a Pareto chart from the data received information.

Types of Defect	Frequency Defect	Total Percentage	Cumulative Percentage
Button Defect	23	39.0	39.0
Pocket Defect	16	27.1	66.1
Collar Defect	10	16.9	83.1
Cuff Defect	7	11.9	11.9
Sleeve Defect	3	5.1	16.9
Total	59

Solution.

The sum of cumulative percentage will always be 100%, the Pareto chart for the above-mentioned data will be -

2. Mention some examples of the 80/20 rule for different sectors

Solution.

Let us consider we have 4 sectors by the name of business, health, crime, Food. Then the 80/20 rule for them can be:

For Business: 80% of the progress is done by 20% of the employees.

For Health: 80% of the bike accidents are caused due to 20% of drivers not wearing the helmet.

For Stock Market: 80% of the profit comes from 20% of the stock market.

For Food: 80% of the food is wasted by 20% of Asia's population.

FAQs on Pareto chart

Q: What is the main aim of the Pareto chart?

A: The Pareto chart's main target is to highlight the crucial data among the bulk set of data.

Q: What does the 80/20 rule explain in the Pareto chart?

A: In the Pareto chart, the 80/20 rule explains that 80% of the results are calculated with 20% of the causes. Therefore finding 20% of the defects will help in determining the 80% of the causes.

Q: What is the other name of Pareto analysis?

A: 80/20 rule

Q: When was the Pareto principle invented?

A: It was invented in the year 1906.

Q: In what manner do the bars are arranged in a Pareto chart?

A: The bars are always in descending order in a Pareto chart.