I just reviewed my inplementation of Pareto in SFE.
By stacking the segments, the cumulative curve is not required anymore : http://sparklines-excel.blogspot.com/2009/12/pareto-v2.html

Cheers

Naomi, alas I don’t have a subscription to the American Statistician, I’ll have to do without, but thanks for the suggestion.

Jon, Chandoo,
Yes the 80/20 not begin absolute is a good point. I think the 80% bit is the most important aspect through. When I use pareto I want to know if I should invest my efforts equally across all the aspect of x or focus on just a few and the pareto helps show this.

I guess one difference between my use and yours Jon, it that I could never really use bars, typically my top 20% would be made up of 100-200 items, I’ll still need to look those up in a table, but I use the chart to see the whole population.

I’m in a bit of a rush here, I’ll try and do some more research and dig out some of my examples and do another post.

Thanks for you comments again, much appreciated!
Ross

Lee Wilkinson, Revising the Pareto chart. The American Statistician, Volume 60, Number 4, November 2006, pp. 332-334.

Few thoughts,

(1) As Jon already suggested, the purpose of Pareto chart is not to confirm the 80-20 principle but to show the relationship in that certain scenario, in my case it is more like 80-60.

(2) A pareto chart, by definition shows both individual and cumulative contributions. We can debate whether it is a right chart. But my intention is to demonstrate how such a chart can be created in Excel, rather than think about its merits and de-merits.

(3) Here is a corrected version of the chart based on Jon’s recommendation – http://chandoo.org/img/p/pareto-chart-with-diff-axis-option.png

I am going to tweet about this article. I am interested in knowing what others think too. :)

What I would change about Chandoo’s chart is that I would remove the secondary axis. It is clearer to have the line and bars on the same scale. I would also tweak the horizontal alignment so that the markers are aligned with the right edges of their respective bars, not centered above them.

The bars themselves are to me more important than the cumulative line, because they can show you which two or so items you need to give your attention to first. In my days as engineer, we used Paretos mostly to show problems, like scrap or defect rates. Work on the first two bars, then come back next time period and revisit the data.

The Pareto Principle originally didn’t really say 80% and 20%. It was more like “Most of something can be attributed to a small proportion of something else”. The obsession with the exact 80% and 20% limits is counterproductive. It might be 80-20, or 80-40, or 80-10. It’s immaterial, ranking the bars in decreasing order shows where attention is needed.