Page 86 - DMGT206_PRODUCTION_AND_OPERATIONS_MANAGEMENT

Unit 4: Quality Control

Pareto Diagram Analysis Notes
 Pareto analysis provides the mechanism to control and direct effort to establish top
priorities and to identify both profitable and unprofitable targets.
 Pareto analysis is useful in a number of applications, e.g., prioritize problems,
goals, and objectives; identify root causes; select key customer relations and service
programs; select key employee relations improvement programs; select and define
key performance improvement programs; allocate physical, financial and human
resources, etc.
 In addition, as mentioned earlier, it is used to identify the ‘critical success factors’.

Figure 4.12: A Pareto Diagram

Table 4.4 shows the pattern of errors that contribute to the cost of photocopying. We see that
operator errors contribute to photocopying quality costs as much as all other sources combined.
We need to focus on operator error to bring down costs. If we further break down this category
into items such as poor job instructions, inadequate attention to machine, and so forth, we
would expect to find a few vital sources that primarily contribute to costs.

Table 4.4: Quality Costs in Photocopying

Class of Loss Annual Frequency of Cumulative
Quality Loss Loss (in %) Frequency of loss
(in ) (in %)
`
Operator error 600 50.0 50.0
Dirty, spotted 300 25.0 75.0
drum or glass
Low ink level 150 12.5 87.5
Paper misfeed 75 6.25 93.75
All other sources 75 6.25 100.00

Pareto analysis is also applicable in the presentation of PIs through selection of representative
process characteristics that truly determine or directly or indirectly influence or confirm the
desired quality or performance result or outcome.

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