What is a Pareto Chart?
A Pareto chart is a type of chart that contains both bar and line graphs, where the bars are ordered from highest frequency of occurrence to lowest frequency of occurrence and the cumulative total is represented by the line.
The principle behind the Pareto chart is that often roughly 80% of the effects come from 20% of the causes. For example, in business, 80% of profits frequently derive from 20% of the available products.
When to use it?
This is an important tool used in quality management which identifies the 20% that is contributing to your 80% of results and it should be used:
To analyze the frequency of defects in a process.
To figure out and focus on the most significant problem in a process
To analyse broad causes by looking at specific components.
Creating a Pareto Chart
For this example, we want to find out which products account for the most total profit.
The type of question you ask determines the dimension and measure on which to base the analysis.
Creating a bar chart that shows Profit by Sub-Category in descending order.
From the Dimensions area of the Data pane, drag Sub-Category to Columns.
From the Measures area of the Data pane, drag Profit to Rows.
Click Sub-Category on Columns and choose Sort descending by field.
Add a line chart that also shows Profit by Sub-Category.
From measures drag Profit to the far right of the view, until a dotted line appears:
Drop Profit, to create a dual-axis view. At this point, both of the Profit bars are configured identically so it is hard to see them separately.
Select SUM(Profit) (2) on the Marks card, and change the mark type to Line and change the colour of the line.
It will look like this:
Add table calculation to the line to show running total and percent of total of sales by Sub-Category.
Click the second copy of SUM(Profit) on Rows and choose Add Table Calculation.
Add a primary table calculation to SUM(Profit) to present Profit as a running total.
Choose Running Total as the Calculation Type.
Do not close the Table Calculation dialogue box.
- Add a secondary table calculation to present the data as a percent of total.
Click Add Secondary Calculation and choose Percent of Total as the Secondary Calculation Type.
This will look like this:
Click the X in the upper-right corner of the Table Calculations dialogue box to close it.
The end result is now a Pareto chart:
And just like that, a chart that contains both bar and line graphs is created, where the bars are ordered from the highest profit to the lowest profit and the cumulative total is represented by the line.