Premium Essay


In: Business and Management

Submitted By Rozlockian
Words 772
Pages 4
In general terms, Pareto coined the 80/20 rule whereby 20% of the issues cause 80% of your problems. So the idea is to identify and focus your resources on the issues which are causing most of your problems. The Pareto bar chart will visually display from left to right a rank-order of which factors are most critical to be addressed. (Heldman, 2013, p.502) More specifically, a Pareto diagram displays “the magnitude of the change on the vertical axis and the root causes along the horizontal axis” (Kendrick, 2009, p.26). In our text, examples are provided in which a Pareto chart represents magnitude in terms of “weeks impacted” along the vertical axis, and its relationship to scope, resource, and schedule. Another Pareto diagram is narrowed to display how each specific subcategory relates to the magnitude of change. (Kendrick, 2009, p.35-36)
A “probability and impact matrix” combines the likelihood of occurrence with the impact that the event would have in order to determine the need for, and at what level of detail, a risk response plan is required. A numbering system such as 1-5 could be used or something more simple such as low-medium-high. How a “probability and impact matrix” is defined will vary by organization and should be developed during the planning stage. (Heldman, 2013, p.254)
As is evident, tables and charts can be used to rank risk by schedule, scope, and budget. These visual representations can be used to quickly identify areas of concern. One of my teachers from a previous class at UMUC pointed out that stakeholders, and in particular non-technical or upper management personnel, want information presented in a clear, easy to understand, format. They shouldn’t have to decipher information being presented to them. This is an example of why the Gantt charts used with MS Project are so popular.
Heldman, K. (2013). PMP…...

Similar Documents

Premium Essay

Pareto Principle

...The Pareto principle is one of the important managerial tool that can be used to identify alternatives which are worthy of attention during decision making. (Grosfeld-Nir, Ronen & Kozlovsky, 2007). Named after an economist, Vilfredo Pareto, and also known as the 80/20 rule, he stated that, “20% of the population possesses 80% of the wealth” (Grosfeld-Nir et. al, 2007 para ii). Liebler and McConnell (2008) call it “a criterion for decision making” (p 155) which suggests that every persons need should be met possibly without causing loss to another person. It also means that when choosing from among alternatives, the ones rejected are due to the reduced merits to one or more groups. This suggests to me that a little portion (components) of a whole heightens the end product of whatever the thing is meant for. For example, 20% of employees help to achieve 80% of an organizational goal. That is, a little input of the few can help in finishing a greater part of a target provided no one is disregarded. An example is when a healthcare facility with so many departments invests more into a smaller department that spells out the organizations’ image giving it the permit to achieve goals successfully; the other departments are not left hanging and yet most of the goals required are reached. A funny but practical example in daily life activity is marriage. The little things that a spouse put into the marriage sparks it up with all the good things that comes with it. If a husband gives a......

Words: 348 - Pages: 2

Free Essay

Equality and Efficiency

...economics is Pareto Optimality. A Pareto optimal situation is a circumstance where a person cannot be made better off without making another person worse off. This means that resources have been allocated and distributed in a way that will result in efficiency. There would be no waste in a Pareto optimal situation. However, one could argue if Pareto optimal situations, while they are efficient, are also fair. The Pareto Optimality theory does not state anything about equality, and so the question of distribution arises. It is a fair Pareto optimal situation when two parties have equal amounts of a good, but it is also Pareto optimal when one person has all the goods and the other has none. This is where the flaws in this theory are. While reducing waste and inefficiency, it raises the possibility of inequality and the goods being distributed and allocated to one powerful person. So Pareto inefficiency does not provide basic sustenance for all. In fact, it may favor the few in power that have the capability to have more goods allocated to them. Pareto optimality will not result in Kingdom-enhancing outcomes if it benefits the rich and leaves the poor with less. Also, this means that to make the rich better off, it will continue to hurt the poor. One of Jesus’ primary messages was to love and take care of the poor. In light of this, we should look for other ways to preserve efficiency, but offer a more fair and equal means of doing so. What Pareto optimality......

Words: 337 - Pages: 2

Free Essay

How to Apply Pareto Principle in Small Businesses

...engage in an ego issue. Small business owners compared their distributions to competitors for success and achievement. Due to such attitude, they always want to grow and expand distribution channels. He applied Pareto’s principle i.e. 80-20 rule to these distributors. It helps to realize that the majority of profit generate from minority of distribution channels. In other words, 80 percentages of profits generate from only 20 percent of distribution channels. It reminds to focus on the 20 percent that matters. Midwest company has around 800 distributors, if we applied Pareto principle only 160 distributors are profitable or might be less. Andrew’s arguments related to OM Quality Management concept. The Pareto principle applied is consistent with OM theory. Here it is applied for finding a profitable distribution channels whereas in OM, it is used for finding defects result from top categories. Basic concept of Pareto principle remains same. Small businesses have been heavily depends on a number of relationships to bring their goods and services to the market. Core network selection of a distribution channels is toughest challenge faced by small businesses over the last couple of years. Andrew focuses on structural and proper management of distribution channels also assessment of these channels to profitable for them. Andrew suggested a metric of assessment of distributor’s profitability and then measuring effectiveness of each distribution channels. Strongest......

Words: 399 - Pages: 2

Premium Essay

Pareto Efficiency

...Markets, Organizations and the Role of Knowledge What is Pareto efficiency? Why do economists use this criterion for comparing alternative economic systems? An allocation of resources is Pareto efficient when there is no alternative that keeps all individuals at least as well off, but makes at least one person better off. One reason that economists use this criterion for comparing economic systems is that it is relatively uncontroverisial. Stronger criteria are likely to be met with more disagreement. What is a property right? What role do property rights play in a market economy? A property right is a socially-enforced right to select the uses of an economic good. A property right is private when it is assigned to a specific person. Property rights are alienable when they can be transferred (sold or given) to other individuals. Since owners bear the wealth effects of their actions, there are strong incentives to rearrange property rights in market transactions to increase efficiency and value. Many economists favor free trade between nations. They argue that free trade will increase total world output and make people of trading nations better off. Discuss how this argument relates to concepts presented in this chapter. Free trade allows countries to concentrate on producing goods and services for which they have a comparative advantage. This specialization increases the total production of goods in the global economy. Thus, each nation can be better off......

Words: 321 - Pages: 2

Premium Essay

Pareto Analysis

...Table of Contents 1.0 Introduction 2 1.1 Total Quality Management 2 1.2 Quality Improvement Strategy 2 1.3 Key Tools for Quality Improvement 2 1.4 Problem Statement 2 1.5 The main Objective 2 1.6 Specific Objectives 2 2.0 Literature Review 2 2.1 Pareto Analysis 2 3.0 Methodology 2 3.1 Data Collection 2 4.0 Results and Findings 2 5.0 Recommendations 2 5.1 Response 2 5.2 Limitations 2 5.3 Conclusion 2 References: 2 CHAPTER ONE 1.0 Introduction This paper aims at demonstrating the use of total quality management Pareto Analysis technique tool at Customs Department in Tanzania Revenue Authority to improve the process of clearing imported cargo through the Dar es salaam Port. One of the focal points in international trade is the country’s borders and the performance of customs and other border agencies, in particular their efficiency in clearing goods. In the modern business environment of just-in-time production and delivery it has become ever more important for traders to be guaranteed fast and predictable release of imported goods. 1.1 Total Quality Management TQM stands for Total Quality management. It is one of the most effective and least understood corporate strategies. It can affect every level, procedure and every person in a company. It is a most comprehensive process that can bring a company to the forefront of the global market. TQM has been defined in many ways by various authors. Some of them are......

Words: 2111 - Pages: 9

Premium Essay

Pareto Law

...Pareto’s Law The law of the vital few and the trivial many In 1906, Italian economist Vilfredo Pareto created a mathematical formula to describe the unequal distribution of wealth in his country, observing that twenty percent of the people owned eighty percent of the wealth. 80% of Output comes from 20% of Input 80% of Results generates from 20% of Effort 80% of Consequences results from 20% of Causes What It Means The 80/20 Rule means that in anything a few (20 percent) are vital and many(80 percent) are trivial. In Pareto's case it meant 20 percent of the people owned 80 percent of the wealth. Project Managers know that 20 percent of the work (the first 10 percent and the last 10 percent) consume 80 percent of your time and resources. You can apply the 80/20 Rule to almost anything, from the science of management to the physical world. You know 20 percent of your stock takes up 80 percent of your warehouse space and that 80 percent of your stock comes from 20 percent of your suppliers. Also 80 percent of your sales will come from 20 percent of your sales staff. 20 percent of your staff will cause 80 percent of your problems, but another 20 percent of your staff will provide 80 percent of your production. It works both ways. How It Can Help You The value of the Pareto Principle for a manager is that it reminds you to focus on the 20 percent that matters. Of the things you do during your day, only 20 percent really matter. Those 20 percent produce 80......

Words: 372 - Pages: 2

Free Essay

Ways of Improving Efficiency of Enterprise

...of efficiency is of great importance in today’s business world. Efficiency is usually defined as effective use of time, effort or cost for the intended task or purpose. In economics, the term efficiency refers to the use of resources so as to maximize the production of goods and services. An economic system is said to be more efficient than another if it can provide more goods/ services for society without using more resources. The term “efficiency” shouldn’t be confused and misused with the term “effectiveness” Вставка из chapter II 2й абзац A great role in the study of the problem of efficiency was played by the Italian economist F.Paretto. according to his theory ВСТАВКА Paretto efficiency is a state of /////// The notion of pareto efficiency is very useful in understanding the ways of increasing efficiency of enterprise. Nowadays there are different classifications of ways of increasing efficiency in the office and in manufacturing. According to имя’s approach the following ways if increasing efficiency of small and medium – sized business can be distinguished III.1 1) ; 2. ; 3. ; 4. ; 5. Ch. III.2 ИМЯ’S theory of increasing efficiency in the company includes the following steps: 1-9. Ch III.3 ИМЯ suggests such ways of improving company’s efficiency as conducting an audit of the computer and electrical systems, examining the layout of the work space for efficiency. Ch III.4 ИМЯ distinguishes some ways of improving productivity at the workplace among......

Words: 9065 - Pages: 37

Free Essay


...Pareto was born of an exiled noble Genoese[->0] family in 1848 in Paris, the centre of the popular revolutions of that year. His father, Raffaele Pareto (1812–1882), was an Italian civil engineer and Ligurian marchese who had left Italy much like Mazzini and other Italian nationalists.[3] His mother, Marie Metenier, was a French woman. Enthusiastic about the 1848 German revolution[->1], his parents named him Fritz Wilfried, which became Vilfredo Federico upon his family's move back to Italy in 1858.[4] In his childhood, Pareto lived in a middle-class environment, receiving a high standard of education. In 1869, he earned a doctor's degree in engineering from what is now the Polytechnic University of Turin[->2].[3] His dissertation was entitled "The Fundamental Principles of Equilibrium in Solid Bodies". His later interest in equilibrium analysis in economics[->3] and sociology[->4] can be traced back to this paper. From Civil engineer to liberal, and then to economist[edit[->5]] For some years after graduation, he worked as a civil engineer[->6], first for the state-owned Italian Railway Company and later in private industry. He was manager of the Iron Works of San Giovanni Valdarno and later general manager of Italian Iron Works.[3] He did not begin serious work in economics until his mid-forties. He started his career a fiery liberal[->7], besting the most ardent British liberals with his attacks on any form of government intervention in the free market[->8]. In 1886 he......

Words: 2396 - Pages: 10

Free Essay

Kek Lapis

...PARETO ANALYSIS Category: Analysis Tools ABSTRACT Pareto Analysis(G) is a statistical technique in decision making that is used for the selection of a limited number of tasks that produce significant overall effect. It uses the Pareto Principle (also know as the 80/20 rule) the idea that by doing 20% of the work you can generate 80% of the benefit of doing the whole job. Or in terms of quality improvement, a large majority of problems (80%) are produced by a few key causes (20%) KEYWORDS Pareto Analysis, Pareto Paradigm, Pareto Chart(G), Pareto Principle, Quality Control, organizing data, frequency of impact of problems, process improvement OBJECTIVES A Pareto chart has the following objectives:  Separate the few major problems from the many possible problems so you can focus your improvement efforts. Arrange data according to priority or importance. Determine which problems are most important using data, not perceptions.   FIELD OF APPLICATION Pareto diagrams could be applied in:  designing of medical processes in order to identify errors, faults, incidents or in the construction of a system that reduces the risk of medical care. analyzing performance data in health organizations.  RELATED TOOLS Fishbone diagram, Scatter Diagram, Run Charts, Flow Charts DESCRIPTION The Pareto diagram is named after Vilfredo Pareto, a 19th-century Italian economist who conducted a study in Europe in the early 1900s on wealth and poverty. He found......

Words: 1582 - Pages: 7

Premium Essay

Pareto Case Study

...Jody Kelly Case Study #2 This Pareto Diagram shows that the most dissatisfaction comes from the areas of making appointments and checking in/out. Waiting time, whether it is to see a physician, getting an appointment or getting through on the phone, is the biggest issue to be addressed. Improving upon waiting time will drastically improve patient dissatisfaction. Problem Area | Occurrences | | Length to wait to see Physician | 13 | | Ease of Getting Appt. | 12 | | Ease of Getting Through on Phone | 10 | | Convenience of Office Hours | 7 | | Courtesy and Helpfulness of Receptionist | 7 | | Friendliness of Receptionist | 5 | | Resposiveness to Phone Calls Related to Care | 5 | | Comfort of Waiting Area | 4 | | How Well Physician Listened | 3 | | Respect Shown By Physician | 2 | | Confidence in Physician's Ability | 1 | | Respect Shown by Nurses/asst. | 0 | | | | | The lengthy wait to see a physician is due to the fact that the doctors are sometimes late getting to the clinic due to surgeries, teaching at a medical school, and unexpected emergences. The ease of getting a convenient appointment is could be inhibited by the doctor’s busy and unpredicted schedules and also the lack of communication between receptionists and secretaries. The difficulty getting through on the phone is caused by a heavy load on the receptionists and the fact that they cannot relay messages to secretaries without adequate phone coverage which also......

Words: 678 - Pages: 3

Free Essay

Economic Analysis

...MRSKom = 3. Keya can offer one orange to Apu for 3 mangoes and 3 mangoes can give her the same satisfaction as before and the exchange make her better off than before, because she has 1 more mango left. This means the initial situation was not Pareto efficient. Answer no. 06 Suppose in the initial resource allocation, MRSAom = 4 and MRTom = 3. Apu can reduce mango production by 3 units and gain 1 unit of orange. He can exchange 1 orange for 3 units of mangoes and can improve his situation because he gains 1 unit of orange in the process. This again implies that the initial allocation was not Pareto efficient. Answer no. 07 We need government intervention even if the First Fundamental Theorem of welfare economics is satisfied because the initial allocation of resources can lead to a point on the grand utility possibility curve, which sustains a very unequal distribution of income and puts the economy on a lower social indifference curve. The government can change the initial allocation of resources such that the distribution of income can be made socially desirable without affecting the Pareto efficiency condition. Answer no. 08 The situation in which price becomes greater than marginal cost, as in a monopoly market, cannot be Pareto efficient because marginal valuation of the consumer for the commodity as expressed by MRS exceeds MRT and in this situation the society’s total welfare can be increased by increasing the production of the commodity. Answer no.......

Words: 1052 - Pages: 5

Premium Essay

Definitions and Illustrations of the Concepts of Pareo and Nash Equilibria

...Definitions and illustrations of the concepts of Pareo and Nash equilibria. PARETO OPTIMUM/EQUILIBIRUM/EFFICIENT The idea of pareto optimum runs through all aspects of economics, for example, comparing different tax rules, and not just in game theory. It gained currency as a test to be applied in selecting economic policy as a result of a contradiction in the theory of the market deriving from the philosophy of utilitarianism. Utilitarianism could be construed as a justification for the oppression of the individual in the name of the greater good of society. This approach sits uncomfortably with the libertarian ideals of market economics, which put the individual above church and the (feudal) state, and by implication above the monarch in direct challenge to feudal rule. (see, eg, To get around the difficulty posed by classical utilitarianism, market efficiency theorems came to rely on the idea of ordinal utility which does not allow for inter-personal comparison of utility. The paretian criterion explicitly rejects inter-personal comparison in arriving at economic policy. The paretian criterion is focused entirely on the individual. A pareto optimum is a state of affairs whereby NO ONE, no individual, can be made better off without making someone worse off. Since no one is above anyone in......

Words: 2188 - Pages: 9

Premium Essay

Percentiles of Range Chart : Pareto Distribution

...International Journal of Advances in Applied Sciences (IJAAS) Vol. 2, No. 3, September 2013, pp. 141~144 ISSN: 2252-8814  141 Percentiles of Range: Pareto Type Model R. Subba Rao1, G. Prasad2, R. R. L. Kantam3 1 Shri Vishnu Engineering College for Women, Bhimavaram - 534202, A.P., India 2 Aditya Degree College, Rajahmundry – 533103, A.P., India 3 Acharya Nagarjuna University, Guntur - 522510, A.P., India Article Info ABSTRACT Article history: Statistical quality control relates heavily on the goodness of control chart limits. The more accurate those limits are, the more likely are to detect whether a process is in control. Various procedures have been developed to compute good control limits. This paper proposes construction of Range chart by considering a Pareto distribution of IV kind. The cumulative distribution function of sample range from their distribution is derived. The percentiles of the distribution of range are worked out and are used to construct the control limits. The performance of the control chart is compared with that of gamma based control chart. Interval estimation for the scale parameter is also worked out. Received Nov 11, 2012 Revised Mar 17, 2013 Accepted Mar 28, 2013 Keyword: Order Statistics Distribution of Range Interval estimation Percentiles Control limits Copyright © 2013 Institute of Advanced Engineering and Science. All rights reserved. Corresponding Author: R. Subba Rao, Shri......

Words: 1949 - Pages: 8

Free Essay

Mad of Pdf

...Pareto Analysis: When Quality-Control Demands Decisions Nathan Logan November 18, 2002 Operations Management 345 What is Pareto Analysis? Since quality is an important factor in the successfulness and longevity of any business (especially where repeat consumption is part of the business model), it would be beneficial to the business to have tools by which quality could be measured. Many of these tools already exist and are called “quality-control” tools. Pareto Analysis, which will be discussed in this paper, is one such tool. It can be described as the 80/20 rule applied to quality-control. The 80/20 rule was originally formalized by Vilifredo Pareto, after studying the distribution of wealth. He noticed that about 80% of wealth was held by about 20% of the population. Several years later, Joseph Juran applied the principle to quality-control, and Pareto Analysis was born. Pareto Analysis essentially states that 80% of quality problems in the end product or service are caused by 20% of the problems in the production or service processes. In practice, then, it is beneficial to separate “the vital few” problems from “the trivial many,” and thereby identify the individual problems that can be fixed and most drastically benefit the end product or service. Once these problems are identified, the 20% that are causing 80% of the problems can be addressed and remedied, thus efficiently obtaining quality. Practical Pareto: How to Use It In conducting a......

Words: 1399 - Pages: 6

Premium Essay

Mgt/350 Problem Formulation and Identification

...a technique my organization is using is producing Pareto Charts. Pareto Analysis Pareto is a tool or technique that displays information identifying the causes or instances which fall outside of established performance standards. This is typically illustrated in a simple bar chart that provides an easy to read format showing the causes of failures and the number of times the failure was identified. This is organized by the greatest number of instances to the least thus establishing a priority for those problems that will have the greatest opportunity for improvements. The organization measures its performance over a period of time to identify a running monthly performance. This allows the opportunity to more efficiently focus a Pareto analysis where results are going to be more effective. The Problem The supply and logistics business primarily consists of electronic transactions in automated systems as well as the actual performance of moving material and equipment to and from the shipping and receiving area. Although supervisors and managers on site have operational control of tactical execution of their processes and procedures, it is very difficult for them to perceiving their own sections performance as part of the big picture in support of the strategic goals of the organization. These sections perform their duties expertly and they adapt to situations as they arise to get the job done. The tools mentioned, Pareto and Running Charts, provides tactical and......

Words: 769 - Pages: 4