# What Are Pareto Charts Used For?

A Pareto chart is a graphical tool used to display the relative proportions of occurrence of different values. It is named after Vilfredo Pareto, an Italian economist who observed that 80% of the land in Italy was owned by 20% of the population. Pareto charts are used to identify and sort potential causes of problems by identifying the most common cause. If you’re interested in learning more about the Pareto chart and how the Pareto principle can be used to improve your business, learn more throughout the rest of this page.

## Creating a Pareto Chart

A Pareto chart is used for creating a graphical representation to help viewers understand which factors influence outcomes. The chart is divided into columns, one for each item, and then sorted in descending order. The first column is for the item with the most occurrences, the second column is for the item with the second most occurrences, and so on. The height of each column is proportional to the number of occurrences for that item.

## Identifying Areas for Improvement

Pareto charts can be used to help identify and prioritize potential improvements to a process. The chart is named after Vilfredo Pareto, an Italian economist who observed that 80% of the wealth in Italy was owned by 20% of the population. Pareto charts are graphical representations of relative frequencies, and they are used to help identify and prioritize potential improvements to a process. The chart is divided into sections, with each section representing a different category. The height of each bar in the chart represents the relative frequency of occurrence of that category. The bar at the top of the chart represents the category with the highest frequency, while the bar at the bottom of the chart represents the category with the lowest frequency. Essentially, almost any aspect of business can apply to the 80/20 rule just as it applies in aspects outside of business as well.

## Using a Pareto Chart for Quality Control

A Pareto chart is a graphical tool used in quality control to help identify the most important factors affecting a process. The chart can be used to identify the most common problems with a product or process and to prioritize corrective actions. To create a Pareto chart, you need to collect data on the frequency of different problems. You can then organize the data in a table and create the bar graph, which is the foundation of the chart. The most common problems will be at the top of the chart, while the least common problems will be at the bottom.

## Making Improvements in Retail

A Pareto chart is a great way to analyze data in a retail setting. It can help you see how much of your sales come from different product categories. This can help you to make better decisions about what products to stock in your store. The products that have the most sales will be toward the left and highest columns while the products with the least sales will be toward the right and bottom.

## Decide What to Include

Pareto charts are often used to identify and prioritize potential causes of problems. The chart is divided into sections, with each section representing a different cause. The bars on the chart represent the relative proportions of occurrence of the different values. The chart can be used to identify which values are the most common and which are the least common. For example, if a business wanted to analyze the age of customers who spent the most money, there would be a bar for each age. The chart would be from left to right in descending order.

This is a great way to measure collected data in terms of duration, cost, or frequency.