# Pareto Analysis

MANAGEMENT ACCOUNTING & PERFORMANCE EVALUATION MAF 635 PARETO ANALYSIS GROUP 10 PREPARED FOR: PN. ZARINAH ABDUL RASIT CONTENT | PAGE| INTRODUCTION| 2| WHAT IS PARETO ANALYSIS? | 2| HISTORY OF PARETO ANALYSIS| 3| WHEN TO USE PARETO ANALYSIS| 3| HOW TO USE PARETO ANALYSIS| 4| RISK AND WAYS TO AVOID IT| 7| ADVANTAGES & DISADVANTAGES| 8| CONCLUSION| 8| APPENDIX| 9| INTRODUCTION In this chapter, we will discuss on Pareto Analysis topic which is a statistical techniques in decision making. We will focus on: * The definition of Pareto Analysis. * The history of Pareto Analysis. * When we can use Pareto Analysis. How to use Pareto Analysis. * The risks of using Pareto Analysis. * Ways to avoid the risks arises. * The advantages and disadvantages of Pareto Analysis. WHAT IS PARETO ANALYSIS? The definition of Pareto Analysis can be identified as statistical techniques in decision making. The difference between other decision making techniques is this analysis are applying the 80/20 rule. Which is by doing 20% of works, will gain 80% advantage of the entire works. Meaning here is by only focusing on significant issue or problems, we can gain a 80% returns as we focus on the entire works.
This Pareto Analysis is a creative way of looking at causes of problems to help stimulate thinking and organize thought. HISTORY OF PARETO ANALYSIS WHEN TO USE PARETO ANALYSIS * During problem analysis, to find those sub-problems that will return the greatest benefits. * Used in any general situation where you want to prioritise action. For example, use it when selecting potential solutions, by comparing their cost-benefit ratios. * Use it in a team situation to show results of voting. HOW TO USE PARETO ANALYSIS STEPS | DESCRIPTION | EXAMPLE |

If this will be too much, then take another step to find a lower-level focus. | * Last-minute changes that are based on intuition rather than measurements and known facts. | * Be very careful when taking intuitive leaps. It is often better to trust a process which can later be verified. | ADVANTAGES & DISADVANTAGES OF PARETO ANALYSIS ADVANTAGES: 1. Organizational Efficiency -The problems ranked highest in severity should become the main focus for problem resolution of improvement. 2. Enhanced problem-solving skills -Enables management to organize work-related problems into connected facts. . Improved decision making -Can measure and compare the impact of changes that take place in an organization. DISADVANTAGES: 1. Easy to make but hard to troubleshoot -Provide no insight on the root causes 2. Multiple Pareto chart may be needed -Further analysis and more charts are needed 3. Qualitative Vs Quantitative data -Can only show qualitative data that can be observed. CONCLUSION Here, we can conclude that Pareto Analysis are helping in decision making by identifying the significant issues or problems to be solved and get the high advantage by doing entire jobs.
The 80/20 rule states that by focusing on 20% of the entire problems, we may generate 80% of the advantage of the entire job. Therefore, we can saves time and improved decision making skills by solving the right or significant problems rather than focus on the symptoms only. However, Pareto Analysis also have some drawbacks when they’re failed to determine the root causes and it needs further analysis since the Parato Analysis only gives the significant problems according to the information gained from unskilled person on the certain issue such as from customers, clients, suppliers and other parties. APPENDIX

Don't use plagiarized sources. Get Your Custom Essay on
Pareto Analysis
Just from \$13/Page
Order your essay today and save 20% with the discount code: OFFNOW

## Order a unique copy of this paper

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
\$26