Joshua has work experience in aerospace/aluminum manufacturing & distribution. He received his BBA in accounting from Kent State University.
Why We Use Pareto Charts
Pareto charts are used to categorize data based on the frequency of occurrences of that data. Data frequencies are displayed as a bar chart, but a Pareto can also display a line graph to display the cumulative frequency of occurring events.
The example provided shows different customer dissatisfactions from a customer survey. The customers were only asked for a yes or no answer when questioned. The data is added to Minitab and a Pareto graph is created to show the highest frequency of events. To follow along, download the data used in this tutorial. Also, if you don't have the latest version of Minitab, you can download a trial for the new version.
Add Data to Minitab
When you start up Minitab, the first thing that you need to do is add data. Below is a set of data that I will use to create a basic Pareto chart. The C1.T column to the left is attribute data that describes what quality problems were tracked. The T in the column header is automatically populated when the header senses attribute type data. The C2 column contains the number of dissatisfied customers relating to the issues.
Set Up the Pareto Chart
Now that we have data, we can set up the parameters for our chart. Click on Stat→Quality Tools→Pareto Chart. After you click on the Pareto Chart selection, a window labeled Pareto Chart will appear.
Enter Parameter Data
Place your cursor in the "Defects or attribute data in:" text box, then double click on the "C1 Quality Problems" to the left. This will add the appropriate labels to the chart showing the different types of defects in the graph.
Next, place the cursor in the "Frequencies in:" text box, then double click on the "C2 No. of Dissatisfied Customers" to the left. This will show the frequency of the quality problem that has been tracked to the graph.
There is an option to classify the remaining defects into one category. Since we don't have a lot of data for our chart, just click on the "Do not combine" selection. Make sure that this selection is made after the two previous steps are completed.
To label the x-axis, y-axis, and the title of the chart, the options button within the Pareto Chart window must be clicked. The x-axis can be labeled "Quality Problems," and the y-axis can be labeled "Number of Dissatisfied Customers." The title of the graph will be "Pareto Chart Displaying Dissatisfied Customers."
Now click OK in the Pareto Chart—Options window, then click OK in the Pareto Chart window.
Now that the chart is created, let's complete an analysis. Notice that the first two attributes account for a little more than 80% of the poor responses from customers. These are the top priorities for the company conducting the survey. The line of thinking traces its origin back to the 80/20 rule. This rule states that 80% of the problems come from 20% of the causes. Once wrong orders and late deliveries are corrected, the Pareto Chart can be revised to set new priorities.
Saving Your Project and Exporting the Graph
To save your file, go to File →Save As, then select the location where you would save the project. There are several ways to export the Pareto Chart from the project:
- One way is to right-click on the graph and copy the image. Next, the image can be pasted where it needs to go.
- Another method is to right click on the image and export the image to an Excel or Word document.
Boyer, K. & Verma, R. (2010). Operations & supply chain management for the 21st century. Mason, OH: South-Western.
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This content is accurate and true to the best of the author’s knowledge and is not meant to substitute for formal and individualized advice from a qualified professional.
© 2018 Joshua Crowder