Definition of Pareto:

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The pareto principle states that 80 percent of the impact of the problem will show up in 20 percent of the causes. (Originally stated: 80 percent of the wealth is owned by 20 percent of the people.)

A pareto chart is a bar chart that displays by frequency, in descending order, the most important defects. Proper use of this chart will have the cumulative percentage on a second y-axis (to the right of the chart).

The pareto chart is used to identify if the pareto principle is evident in the data. If the pareto principle is evident, about 20 percent of the categories on the far left will have about 80 percent of the impact on the problem.

Learn more about the Pareto chart.

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