Resolved: Pareto Analysis
When to use Pareto principle in our analysis?
the top 20% of the bars (depening up on your number of bins on the bar chart, usually the first 1-4 bar)on the pareto diagram shows the top 80% of the data.
it is helpful in case you are looking at the number of defects vs reasons for defects. if you can chart it in the form of a pareto diagram, you can see that about 80% of the defects are being caused by about 20% of the reasons.
80-20 is an arbitary ratio. not exactly 80-20 but roughly. hope this helps.