A Pareto Chart is a type of chart where individual values are represented by bars (in descending order) and the cumulative percentage of the total is represented by a line. Named after Vilfredo Pareto, who formulated the Pareto Principle (80/20 Rule), which states that for many events, roughly 80% of the effects come from 20% of the cause.
How to create a Pareto Chart and check the 80/20 Rule
- Step 1
Add the unit of measure in rows (Sales) and the dimension in columns (Country). Sorting Country in descending order by SUM(Sales) and fitting to width. Finally, adding Country into details.
- Step 2
Add two quick calculated field to the SUM(Sales) .Primary calculation being a Running Total and the secondary calculation being a Percent of Total. Both with the specific dimension by Country. This will calculate the percentage of the running total Sum of Sales by country
- Step 3
Change the percentage of the cumulative sum of sales to a line chart. Then add a dual axis with another SUM(sales), but this one will be a bar chart. The left axis is the frequency of Sales, while the right axis is the cumulative percentage of the total number of Sale. Below demonstrates a Pareto Chart.
- Step 4
To investigate the 80/20 Rules further, we can continue with a few additional steps. First change the the the measure of Country to a Count Distinct. Then add the same two quick table calculations as before but to CNTD(Country). This will give us the percentage of the cumulative sum of the count distinct of Countries. Then add Country as a Path in the Marks table on the % of cumulative sum of Sales tab.
Below we now see the Sum of Sales along the left axis, % of cumulative sum of sales along the right and % of cumulative sum of the distinct count of countries along the bottom.
- Step 5
Finally to check 80/20 rule we can add in two constant lines from the analytics tab. As demonstrated below, nearly 20% of all the countries contribute to almost 80% of the total sales. This is a good example of how the principle can be close to 80/20 but not exact.