In this video, I explain the Pareto graph or Pareto Diagram about the 80/20 rules
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Pareto diagram, also known as a Pareto chart, is a type of chart that contains both bars and a line graph. It is a visual tool widely used in quality control and business to represent the frequency of occurrence of events. The principle behind it is based on the Pareto Principle, which is also known as the 80/20 rule. This principle states that for many events, roughly 80% of the effects come from 20% of the causes.

Here's how a Pareto diagram works:

Identification of Categories: List each category or cause of a problem that you want to represent.

Data Collection and Order: Collect data for each category, and order the categories from the highest to the lowest based on their frequency of occurrence or impact.

Bar Graph Creation: Create a bar graph with the ordered categories on the x-axis and the frequency or impact (usually measured by cost or count) on the y-axis. The leftmost bar should represent the category with the highest frequency or impact.

Cumulative Percentage Line: Calculate the cumulative percentage of each category, and add a cumulative line graph that overlays the bar graph. The first point on the line graph corresponds to the top of the first bar, and each subsequent point is added to the previous cumulative percentage.

Analysis: Use the chart to determine which categories have the most significant impact. The chart will typically show that a small number of categories are responsible for a large percentage of the problem.

Action: Focus on addressing the few critical categories rather than trying to fix all categories, in line with the 80/20 rule.

The Pareto diagram is a powerful tool because it visually displays which factors are more significant and thus allows organizations to prioritize resources where they will be most effective. It's commonly used in various forms of analysis, including inventory management, defect prioritization, and sales analysis.