2. Introduction
• Pareto analysis is a formal technique useful where many
possible courses of action are competing for attention
• Pareto analysis is a creative way of looking at causes of
problems because it helps stimulate thinking and
organize thoughts
• This technique helps to identify the top 20% of causes
that needs to be addressed to resolve the 80% of the
problems
• Works on principle of “the vital few and the trivial many”
3. History
• Named after Vilfredo Pareto, an Italian economist and
sociologist who lived from 1848 to 1923
• In 1906, He created a mathematical formula to describe
the unequal distribution of wealth in his country,
observing that twenty percent of the people owned
eighty percent of the wealth
4. Pareto Analysis: Procedure
1. Gather data on the frequency
Causes
Percentage of
Total
Cumulative
Percent
A
20%
20%
B
18%
38%
C
15%
53%
2. Rank the causes from the
D
11%
64%
most to the least important, and
E
10%
74%
F
6%
80%
calculate
G
6%
86%
H
6%
92%
I
5%
97%
J
3%
100%
of the causes
percentage
the
cumulative
5. Pareto Analysis: Procedure
3. Plot with the different causes on the x-axis, ordered
from the most to least frequent, and the percentages on
the y-axis, from 0 to 100%. Construct a bar graph based
on the percentage of each cause
4. Construct a line graph of the cumulative percent
7. Pareto Analysis: Procedure
5. Draw a line from 80% on the y-axis (of cumulative percent)
to the line graph that is parallel to the x-axis, and then drop
the line down to the X axis. This line separates the important
causes from the trivial ones
35
100
90
80
70
60
50
40
30
20
10
0
30
25
20
15
10
5
0
a
b
c
d
e
f
g
h
i
j
8. Pareto Analysis: Example
Mr. X is trying to determine why his clinic has been reaching such
a small proportion of its eligible clients.
In carrying out the exercise, he forms a team. The team will first
identify the primary reason why users are not using the services.
They will then establish the causes for the problem and define a
strategy and a plan of action for solving it.
The objective of the process will be to improve the quality of the
services offered.
9. Pareto Analysis
Step 1. Frequency analysis
Possible Causes of Long Waiting Time
Percent of total
(A) Policies require excess information on
users
1
(B) Policies require complicated
procedures
1
(C) Too much paperwork
2
(D) Not enough funding
2
(E) Inadequate schedules
13
(F) Inadequate policies
2
(G) Clinic personnel have too many
chores at home
2
(H) Clinic personnel have other jobs
2
10. Pareto Analysis
(H) Clinic personnel lack punctuality
6
(I) Clinic personnel have insufficient
training
2
(J) Clinic personnel aren't motivated
1
(K) Clinic personnel are careless
1
(L) Clinic personnel don't follow the
schedule
16
(M) Users forget ID cards
1
(N) Users don't keep appointments
2
(O) Delay in handing over lab results to
doctors
14
(P) Outdated methods
12
(Q)Lack of automation
9
(R) Procedures take too long
11
11. Pareto Analysis
Step 2.Ranking causes
Cause
Percentage
Cumulative %
(L) Clinic personnel don't follow the schedule
16
16
(O) Delay in handing over lab results to doctors
14
30
(E) Inadequate schedules
13
43
(P) Outdated methods
12
55
(R) Procedures take too long
11
66
(Q) Lack of automation
9
75
(H) Clinic personnel lack punctuality
6
81
(C) Too much paperwork
2
83
12. Pareto Analysis
(D) Not enough funding
2
85
(F) Inadequate policies
2
87
(G) Clinic personnel have too many
chores at home
2
89
(H) Clinic personnel have other jobs
2
91
(I) Clinic personnel have insufficient
training
2
93
(N) Users don't keep appointments
2
95
(A) Policies require excess information
on users
1
96
(B) Policies require complicated
procedures
1
97
(J) Clinic personnel aren't motivated
1
98
(K) Clinic personnel are careless
1
99
(M) Users forget ID cards
1
100
13. Pareto Analysis
Step 3. Construct a bar graph based on the
percentage of each cause
20
18
16
percentage
14
12
10
8
6
4
2
0
L
O
E
P
R
Q
H
C
D
F
G
causes
H
I
N
A
B
J
K
M
14. Pareto Analysis
Step 4. Construct a line graph based on cumulative %
20
120
18
100
16
percentage
14
80
12
10
60
8
40
6
4
20
2
0
0
L
O
E
P
R
Q
H
C
D
F
G
causes
H
I
N
A
B
J
K
M
15. Pareto Analysis
Step 5. Pareto Diagram
20
120
18
100
16
percentage
14
80
12
10
60
8
40
6
4
20
2
0
0
L
O
E
P
R
Q
H
C
D
F
G
causes
H
I
N
A
B
J
K
M
16. Pareto Analysis
Interpretation of results
Approximately 7 factors are
responsible for 80% of the
waiting time problem. The
other
12
factors
are
responsible for only 20% of the
said problem.
20
120
18
100
16
percentage
14
80
12
10
60
8
40
6
4
20
2
0
0
L
O
E
P
R
Q
H
C
D
F
G
causes
H
I
N
A
B
J
K
M
17. Benefits
• Solves efficiently a problem by the identification and the
ranking, according to their importance, of the main
causes of the faults
• Shows where to focus efforts
• Allows better use of limited resources
• Enhances problem-solving skills
• Improves decision making
