Disclosure: This post may contain affiliate links, meaning when you click the links and make a purchase, we receive a commission.

How to Interpret Pareto Chart in Excel (2 Practical Examples)

In this article, we will show you how to interpret Pareto Chart in Excel. Pareto chart is used for finding out what sectors are major contributions to any cause. Suppose we went to the nearest medical hospital  to see what types of diseases people are more prone to have and you are going to find out what type of food people are eating. To find most occurred diseases you will use Pareto chart and using Pareto Chart you can find out what type of food they are eating. Then you can correlate food and diseases to find what type of food causes it.

Overview of Interpreting Pareto Chart in Excel

 


Download Practice Workbook

You may download the following workbook to practice yourself.


Why Do We Use Pareto Chart?

Pareto analysis has the basics of Pareto principle named after famous economist Vilfredo Pareto. He was remembered for the famous formula called 80/20 principle. Here according to Pareto, 80 percent of the event is controlled by the 20 percent of the factor. The real life examples are

  • 80% market share owned by 20% of the company
  • 80% of the fortune is acquired by 20% of the people
  • 80% of the software issues caused by 20% of the bug

So we should use Pareto Chart in Excel to find out which major issues contribute to the problems, which are the main causes of the problem and identify them and solve them.


2 Practical Examples to Interpret Pareto Chart in Excel

Here we have given 2 practical examples to interpret Pareto Chart. You will easily create your own data in Excel to set and apply your Pareto analysis. First we analyze  Pareto Chart of restaurant Complaints and then we also create Pareto Chart to find out  Disease and Food correlation.

Here is the Data Table of Restaurant Complaints.

Data table for restaurant complaints

And this is the data table for Disease and Food Correlation which we will use to interpret a Pareto Chart.

Data table for disease and food correlation)

In the following description, we will interpret this chart with useful discussions.


1. Analyzing Restaurant Complaints by Interpreting Excel Pareto Chart

Here we will go to the Insert Tab, then ,we will go to Histogram option and select Pareto. And then we will create a Pareto Chart and find out the most contributing factors.

Steps:

  • First you have to select the data from the table.

Selecting Dataset for Creating Pareto Chart

  • Then, we are going to Insert to Statistics Chart. After that, we are going to select the Pareto chart.

Showing which options to select to get Pareto Chart

  • Finally, we will get the result and give the title.

 Creating the Pareto Chart

  • Here, in this chart we can see people complaining that foods are overpriced and small portions. Both of them contribute more than the other contributing factors.
  • Thus the Pareto Chart gives us the opportunity to focus on the problems.

Interpreting Pareto Chart

Read More: How to Use Pareto Chart in Excel (2 Suitable Ways)


2. Finding Correlation Between Food and Disease Interpreting Pareto Chart

In this example we will give the data table of the patients and the sales of food to find out which food is causing the diseases. The dataset we will use in this example is given below.

Getting Pareto Chart for Diseases in July

Steps:

  • First, we are going to select the Data Table of Disease in July and create a Pareto chart. To see the process of creating a Pareto Chart, please follow the steps of Example 1.
  • Then, we will give title Diseases in July like previous example,
  • Thus, we get the Pareto Chart of Diseases in July.

Getting Pareto Chart for Diseases in July

  • Similarly, we can get the Pareto Chart for Total Foods Sold in July by selecting corresponding data in the Excel sheet.

Getting Pareto Chart for total Food Sold in July

If we analyze the two charts, we can see that eating Coke, Burger and Paporoni contributes to Obesity and Diabetes.Here, we can gather an idea of what type of foods people usually like.

Comparing both Chart for which food causes the diseases

And the following figure shows us the common disease that may occur consuming those type of foods.

Comparing both Chart for which food causes the diseases

Thus Pareto Charts give us the idea what foods are contributing to the most occurring diseases.

Read More: How to Make Pareto Chart in Excel (with Easy Steps)


Conclusion

In the above pictorial discussions, you can easily know how to interpret Pareto Chart in Excel. You can create your own custom data and interpret Pareto Chart like we have done it.Thus Pareto Chart will help you to find major issues of the problem easily. If you want more tutorials like this go to ExcelDemy.com and become an Excel master.


Related Articles

Joyanta Mitra

Joyanta Mitra

I am Joyanta Mitra. I graduated from BUET EEE in 2021. My college is Notre Dame College. My hobby is to play high graphics computer games. And I am going to pursue my career in your company Softeko. I am working and doing research on Microsoft Excel and here I will be posting articles related to this.

We will be happy to hear your thoughts

Leave a reply

ExcelDemy
Logo