Pareto chartA Pareto chart, also called a Pareto graph, is a vertical bar graph in which values are plotted in decreasing order of relative frequency from left to right. The independent variable is shown on the horizontal axis and the dependent variable s, are portrayed as the heights of bars having equal width. A point-to-point graph, which shows the cumulative relative frequency, may be superimposed on the bar graph. The Pareto chart gets its name from Vilfredo Pareto, an Italian economist who studied the distribution of wealth in various countries. He found that in nearly every society, approximately 20% of the population controls 80% of the wealth. This phenomenon became known as the 80-20 rule or the Pareto principle. The 80-20 rule has been extrapolated (in some cases improperly) to suggest that in many real-world situations, 20% of the causes of an effect are responsible for 80% of the manifestations of that effect. When the values of a statistical variable are placed in order of relative frequency, a bar graph clearly reveals which factors have the greatest impact and which factors have the least impact. In the enterprise, this can help personnel solve problems by clearly showing where their efforts are likely to yield the greatest benefit. Compare histogram and pie graph.
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| Last updated on:
Nov 06, 2007 |
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