Pareto analysis
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Pareto analysis is a statistical technique in decision making that is used for selection of a limited number of tasks that produce significant overall effect. It uses the Pareto principle - the idea that by doing 20% of work you can generate 80% of the advantage of doing the entire job.
Pareto analysis is a formal technique useful where many possible courses of action are competing for your attention. Basically, it consists of estimating the benefit delivered by each action with subsequent selection of a number of the most effective actions that deliver the total benefit reasonably close to the maximal possible one.
[edit] Steps to identify the important causes using Pareto analysis
- Step 1: Form a table listing the causes and their frequency as a percentage.
- Step 2: Arrange the rows in the decreasing order of importance of the causes i.e. the most important cause first
- Step 3: Add a cumulative percentage column to the table
- Step 4: Plot with causes on x- and cumulative percentage on y-axis
- Step 5: Join the above points to form a curve
- Step 6: Draw line at 80% on y-axis parallel to x-axis. Then drop the line at the point of intersection with the curve on x-axis. This point on the x-axis separates the important causes and trivial causes.
[edit] See also
| This page uses content from the English-language version of Wikipedia. The original article was at Pareto analysis. The list of authors can be seen in the page history. As with Psychology Wiki, the text of Wikipedia is available under the GNU Free Documentation License. |
