Pareto Analysis - Business Sales

Add Business Sales Data

Variables

Pareto Presentation

Actual v. 80/20

Data

Archived Initial Data and examples

Explore

Add Business Sales Data

Overall Pareto Analysis & Breakpoint(s)

Choose the data you want to analyze!

Scenario Selected for Analysis:

All

⁠

Note: If this is blank, no data will be analyzed!

Contains:

[ ]

⁠

Records.

Choose whether to include negative sales:

⁠

Only Positive Sales Included, Negative Sales Excluded.

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Of these

$1,029,664.50

⁠

of the sales are negative.

Understanding the Data

Breakpoint Indicators

How do you know the Vital Few from the Useful Many, and where is the Awkward Zone?

Generally this is differentiated when the slope pivots from increasing to flattening. We call these “breakpoints” or “breakpoint indicators”.

The Breakpoint Indicator for the current data is

⁠

(as generated automatically by the slope from the first datapoint to the last datapoint). The Breakpoint Indicator is based on the data in this document and generated automatically.

Since ....

there are

[ ]

⁠

unique businesses and

⁠

0

⁠

worth of total sales,

If each business’ rank corresponded to a linear relationship to rank, for each change in rank the cumulative sales should grow by the breakpoint indicator (

⁠

The breakpoint indicator is the slope of the line. Y=

⁠

* X

If the slope (aka increase in sales by rank, aka

⁠

) is less than

⁠

then the curve is flattening indicating where you might want to break the data into a group and if it grows higher, the curve is growing indicating a grouping.

Remember, traditionally there are three categories:

The Vital Few (The slope is greater than the linear relationship)

The Awkward Zone (The slope is near the linear relationship)

The Useful Many (The slope is less than the linear relationship)

Adjusting Tolerances - Breakpoint Variation

As it is unlikely that you will find a point that the slope exactly equals

⁠

we provide a “fudge factor” by allowing you to indicate the Breakpoint Variation, allow you to indicate a percentage percentage can vary, so you can easily create an “Awkward Zone”. Currently in this analysis we are allowing an upper and lower variation of this breakpoint indicator by the Breakpoint Variation you indicate here:

⁠

000

⁠

percent

Here are some presets:

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Set Breakpoint Variation to 0%

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Set Breakpoint Variation to 5%

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Set Breakpoint Variation to 10%

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Which means per your data the breakpoint(s) will vary by

0

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And will encompass the increase in sales by rank from

0

⁠

0

⁠

The Risk of not having this:

The risk of not having an “Awkward Zone” or a Breakpoint Variation is that you will be too precise and miss a potential Vital Few or Useful Many because of an arbitrary decision (If something barely misses a category etc.

The use of the Breakpoint Variation and Awkward Zone allows you to be conservative or aggressive based on your need while having a basis for that decision, and allows you to have a 3rd zone to segment data by (useful in more gradual sloping situations).