The Pareto analysis was formed by Vilifredo Pareto. He studied about the unequal distribution of wealth in his country and come out with a formula. He observed that 20% of the people owned 80% of the total wealth. Few years later, Joseph Juran applied the principle to quality-control. This principle applies 80/20 rule where 20% of something is responsible for 80% of the results. A Pareto analysis used to analyse situation and monitor and evaluate results of any significant improvements or changes. It is simple because this technique is to come up with least effort to overcome most of the problem. For example, the company is to analyze the failing of service centre, they find out that lack of training is the main cause of problem. Those 20
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Discuss the advantage and disadvantage / limitation of the Pareto analysis.
Advantage
1) Organizational operate efficiently
Organizational problems will be listed, the listed problem will be ranked in order from the highest to the lower. The problems that ranked the highest should be the main focus to overcome the problem. With this, company can operate efficiently when they can analyze the cause of problems and can spend time to solve the problems.
2) Enhanced problem-solving skills
Since Pareto analysis is to analyze causes of problem, so when they clearly outlined the problems, they can begin the necessary planning to solve the problems.
3) Improved decision making
Conducting Pareto analysis enables organization to measure and compare the impact of changes that take place in an organization. While resolving the problems, some procedures and processes might have to be making a changes and this should be documented during a Pareto analysis. This documentation will enable better preparation in the future changes.
Disadvantage
1) Multiple Pareto Charts may be needed
More charts may be needed to trace the causes of errors to its source. Lower levels of Pareto charts may be needed. For example, if mistakes are occurring in shipping and receiving, further analysis and more charts are needed in order-taking or …show more content…
The core factor of a successful Pareto analysis lies in the accuracy of the scoring of each issue. Small-business owners who fail to assign the proper scoring to each factor on the Pareto chart will receive inaccurate results. For example, say the company's shipping manager conducts a Pareto analysis on problems within his department. He wants to see where the most problems occur within the shipping process. If the scores reflect that the problem lies in the transportation section, when the real problems stem from packaging and preparing items for shipping, the manager will focus on the wrong problem while the real issue
Discuss the advantage and disadvantage / limitation of the Pareto analysis.
Advantage
1) Organizational operate efficiently
Organizational problems will be listed, the listed problem will be ranked in order from the highest to the lower. The problems that ranked the highest should be the main focus to overcome the problem. With this, company can operate efficiently when they can analyze the cause of problems and can spend time to solve the problems.
2) Enhanced problem-solving skills
Since Pareto analysis is to analyze causes of problem, so when they clearly outlined the problems, they can begin the necessary planning to solve the problems.
3) Improved decision making
Conducting Pareto analysis enables organization to measure and compare the impact of changes that take place in an organization. While resolving the problems, some procedures and processes might have to be making a changes and this should be documented during a Pareto analysis. This documentation will enable better preparation in the future changes.
Disadvantage
1) Multiple Pareto Charts may be needed
More charts may be needed to trace the causes of errors to its source. Lower levels of Pareto charts may be needed. For example, if mistakes are occurring in shipping and receiving, further analysis and more charts are needed in order-taking or …show more content…
The core factor of a successful Pareto analysis lies in the accuracy of the scoring of each issue. Small-business owners who fail to assign the proper scoring to each factor on the Pareto chart will receive inaccurate results. For example, say the company's shipping manager conducts a Pareto analysis on problems within his department. He wants to see where the most problems occur within the shipping process. If the scores reflect that the problem lies in the transportation section, when the real problems stem from packaging and preparing items for shipping, the manager will focus on the wrong problem while the real issue