Excel and Access are common spreadsheet databases used for data collection and storage. They will automatically graph frequency data into histogram format as desired. Histograms are most effective for visual analysis of population data where correlations may be further investigated. When graphing histograms, always ask if the picture is reasonable and logically correct; there is always the danger that software programs can make graphically pleasing displays from illogical input.
The Pareto Principle
The Pareto Principle derives its name from Vilfredo Federico Domaso Pareto, an Italian-Swiss socio-economist and trained, practicing engineer. As Chair of Economics in the Faculty of Law at Lausanne University in 1892 and forerunner in the field of mathematical approaches to socio-economics problems, Pareto conducted a study of the distribution of personal incomes of an entire economy. This led him to postulate that:
Pareto postulated that, in an entire economic population, only a few individuals controlled the majority of wealth. This proved to be valid and become known as Pareto's Law, Pareto's Concept, or Pareto's Principle. Historically, the Pareto Principle has come to be more universally known as the 80/20 rule, i.e., an 80% improvement in quality or performance can reasonably be expected by eliminating 20% of the causes of unacceptable quality or performance.
Dr. Joseph M. Juran, Chairman Emeritus, Juran Institute, and world-renowned authority on quality management, was the first to apply this concept to the industrial environment. He noted that in many situations where a group of factors contribute to a common effect, only a vital few account for the bulk of the effect, and the useful many in the population account for the rest. Many problems associated with quality and performance adhere to this principle to identify and separate the vital few from the useful many.
The Pareto Concept
The simplicity of the Pareto concept makes it prone to be underestimated and overlooked as a key tool for quality improvement. Generally, individuals tend to think they know the important problem areas requiring attention; if we know, why do the problem areas exist? The most benefit derived from a Pareto analysis is to identify and define improvements for quality or performance improvement.
The idea is quite simple, but to gain a working knowledge of the Pareto Principle and its application, it is necessary to understand these basic elements: