A Pareto Chart is generally a vertical bar graph showing problems in a prioritized order, so it can be determined which problems should be tackled first. A Pareto Chart is a special form of a histogram where the categories have been sorted from most frequent to least frequent. One would not want to sort the categories from most frequent to least frequent if there is a natural order to the categories, such as a distribution by age or cycle time.
It is often useful to make Pareto Charts of data collected using the Check Sheet method, and in fact, the Check Sheet option includes a built-in Pareto Charting feature. There actually was a person named "Pareto" who developed this chart as part of an analysis of economics data more than 100 years ago. He determined that a small portion of the people within the economy controlled a large portion of the economy. Likewise, one doing analysis of accidents or events may find that a large portion of the accidents are cause by a small population of causes. The "Pareto Principle" states that 80% of the problems come from 20% of the causes. The Pareto Chart analysis should be performed over a fixed time interval of performance indicator results. The Pareto Chart analysis should only be performed after the control chart analysis is complete. The time interval should be chosen depending on the existence or non-existence of statistically significant trends. This consideration of significant trends is important, as the frequency distribution in each category may be different due to the process changes that occurred to cause the significant trend. Thus the arbitrary choice of "Fiscal Year to Date" or "Calendar Year to Date" or "The past two years" may not be appropriate.
Interpreting a Pareto Chart ...