What is Pareto Chart?
Pareto principle was introduced by Italian Economist Vilfredo Pareto. He stated that 80% of the effects are caused by 20% of the causes. So if we closely monitor and solve 20% of the causes. It will significantly improves the affected area and you will see good results.
For Example: 80% of the revenue gets generated by 20% of the clients
While doing research Mr. Pareto found that 20% of land in Italy was occupied by 80% of the population. He carried out this survey to other areas and got same results
This rule is also well known as 80/20 rule across the globe and is mostly being used to find the causes which is impacting business or producing defective products/services
Hence Pareto chart is a graphical representation of Pareto Principle
When to use Pareto Chart in your study?
Pareto Chart studies the frequency distribution and advise you the most impacted/affected areas. So you should use Pareto Chart when:
How to create Pareto Chart in Excel?
Here are few steps to collect data before you start preparing your Pareto Chart in Excel:
Here I collated the Complaints data from one of the Courier Company survey and will create Pareto Chart for them. Lets follow the steps now:
Steps to Create Pareto Chart:
So here your Pareto chart is ready. This will help you to showcase the major pain areas or impacted areas in visual display
Now if you want to make this chart more appealing and visual. Then you can do this by learning tricks about formatting charts.
Hope you liked this article. Please comment below for any questions and for your feedback about this tutorial.
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