In addition to being a static technique, the Pareto Analysis is a creative and practical way of looking at the causes of problems. It stimulates ideas about thinking ...CorporatePlansPublishyourresearchJoinToolshero×CloseToolkitChangeManagementCommunicationSkillsCreativityDecisionMakingFinancialManagementHumanResources(HR)InformationTechnology(IT)InnovationLeadershipManagementMarketingPersonalDevelopmentProjectManagementProblemSolvingPsychologyQualityManagementSociologyStrategyToolsheroesVideosTemplatesKnowledgebaseLearningPlansCorporatePlansPublishyourresearchJoinToolsheroHome»ProblemSolving»ParetoAnalysisParetoAnalysisThisarticleexplainsthetheoryofParetoAnalysisbyVilfredoParetoinapracticalway.Afterreadingyouwillunderstandthebasicsofthispowerfulproblemsolvingtool.WhatistheParetoAnalysis?TheParetoAnalysis,alsoknownastheParetoprincipleor80/20rule,assumesthatthelargemajorityofproblems(80%)aredeterminedbyafewimportantcauses20%).Thefounderofthisanalysis,ItalianeconomistVilfredoPareto,discoveredthiswhenhewascarryingoutastudyattheendofthe18thcenturyinwhichheascertainedthat20%oftheItalianpopulationowned80%oftheproperty.JoinusandgetunlimitedaccessByjoiningoure-learningplatform,youwillgetunlimitedaccesstoall(1000+)articles,templates,videosandmanymore!FindoutmoreThis80/20ruleorParetoAnalysiswasfurtherdevelopedbytotalqualitymanagementguruJosephJuran(after1940)andcanbeappliedtovariousmatters(forinstancedecision-makingandothercomplexissues).Afewofthe80/20ruleexamplesfromdailypracticewhichareoftencorrectare:80%ofthecustomercomplaintsensuefrom20%oftheproductsorservicesdelivered.20%oftheproductsorservicesyield80%oftheprofits.20%ofthepeopleresponsibleforsalesgenerate80%oftheoperationalincome.20%ofthesystemfailuresarecausedby80%fthesystemproblems.TheprincipleoftheParetoAnalysisisbasedontheZipfdistribution(patterninlinguisticsandadiscreteprobabilitydistributionwithparametersλandN).Inadditiontobeingastatictechnique,theParetoAnalysisisacreativeandpracticalwayoflookingatthecausesofproble