PART-3
1. The Pareto-Lorenz Method
The Pareto-Lorenz method is a statistical technique used to illustrate the principle
that in many situations, a large proportion of problems (or defects) are often caused
by a small number of causes. This method is based on the Pareto Principle, also
known as the 80/20 rule, which posits that roughly 80% of the effects come from
20% of the causes. It is a useful tool in quality control and process improvement,
helping to identify and prioritize the most significant issues.
2. Determine the Number of Defects for Each Type of Defect (D1-D10)
For the purpose of this example, let's assume we have the following total number
of defects per year:
Total defects: 10,000
We need to assign these defects to 10 categories (D1-D10). Here’s an example
distribution:
D1: 100
D2: 512
D3: 2940
D4: 95
D5: 870
D6: 120
D7: 187
D8: 350
D9: 4774
D10: 52
3. Prepare the Table
Next, we prepare the table listing the defects from the largest number to the
smallest and include cumulative percentages.
Type of Number of Sum of Percentage Cumulative
No Defect Code Defects Defects (%) Percentage (%)
Defect on the
1 material D9 4774 4774 47.74 47.74
2 Bad stitching D3 2940 7714 29.40 77.14
3 ... D5 870 8584 8.70 85.84
4 Cracked sole D2 512 9096 5.12 90.96
5 ... D8 350 9446 3.50 94.46
6 ... D7 187 9633 1.87 96.33
7 ... D6 120 9753 1.20 97.53
8 ... D1 100 9853 1.00 98.53
9 ... D4 95 9948 0.95 99.48
10 Other D10 52 10000 0.52 100.00
4. Calculate Percentages and Cumulative Percentages
This has been done in the table above. Percentages are calculated as: Percentage =
(Number of DefectsTotal Defects)×100Percentage=(Total DefectsNumber of Defe
cts)×100
Cumulative percentages are calculated by adding each defect's percentage to the
sum of the previous percentages.
5. Create a Pareto Chart
To create the Pareto chart, follow these steps:
Plot a bar chart with the defect types (D1 to D10) on the X-axis and their
respective percentages on the Y-axis.
Plot a line chart over the bar chart representing the cumulative percentages.
6. Discuss the Chart
The Pareto chart will show that a majority of the defects (over 75%) come from
just a few types of defects (D9, D3, and D5). This visual representation reinforces
the 80/20 rule, indicating that focusing on the top few defect types can
significantly reduce the total number of defects. By addressing the major defect
types first, you can achieve the greatest improvement in product quality.