Pareto analysis:
"Synonym for ABC analysis. Classifies items into different categories depending on their annual usage. "

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Seven steps to identifying the important causes using Pareto Analysis:
1. Form a table listing the causes and their frequency as a percentage.
2. Arrange the rows in the decreasing order of importance of the causes, i.e. the most important cause first.
3. Add a cumulative percentage column to the table.
4. Plot with causes on x-axis and cumulative percentage on y-axis.
5. Join the above points to form a curve.
6. Plot (on the same graph) a bar graph with causes on x-axis and percent frequency on y-axis.
7. Draw a line at 80% on y-axis parallel to x-axis. Then drop the line at the point of intersection with the curve on x-axis. This point on the x-axis separates the important causes on the left and less important causes on the right.

Terms related to Pareto analysis:
Paretos law
Pareto distribution
ABC analysis