Pareto Analysis

Examples of Pareto Analysis in the following topics:

• Total Quality Management Techniques

  • Six sigma, JIT, Pareto analysis, and the Five Whys technique are all approaches that can be used to improve overall quality.
  • Pareto analysis is a statistical technique used to select a limited number of tasks that produce significant overall effect.
  • It uses the Pareto principle: most problems have a few key causes.
  • Pareto analysis also concludes that 80% of the result can be generated by focusing on 20% of the key work.

• Criteria to evaluate alternatives

  • Pareto efficiency is a restrictive criteria and tends to promote the status quo.
  • To remedy this problem the criterion of Pareto Potential is used.
  • This is the foundation of criteria such as Benefit/cost analysis, rate of return on investment and internal rates of return.
  • The problem with Pareto Potential is that it introduces the question of equity.
  • This example also illustrates the issue that the status quo tends to be supported by the Pareto Optimality criterion.

• Economic Way of Thinking

  • Benefit/cost analysis is a basic approach that is used.
  • This requires "marginal analysis."
  • B/C analysis is a variation of the Pareto Potential criterion.
  • In economics, there are "schools of thought" that have alternative approaches to the analysis of economic processes.
  • While the French probably developed marginal analysis before others, their work was not translated until later.

• Exploratory Data Analysis (EDA)

  • Exploratory data analysis is an approach to analyzing data sets in order to summarize their main characteristics, often with visual methods.
  • Exploratory data analysis (EDA) is an approach to analyzing data sets in order to summarize their main characteristics, often with visual methods.
  • Exploratory data analysis was promoted by John Tukey to encourage statisticians to explore the data and possibly formulate hypotheses that could lead to new data collection and experiments.
  • Exploratory data analysis, robust statistics, and nonparametric statistics facilitated statisticians' work on scientific and engineering problems.
  • Tukey held that too much emphasis in statistics was placed on statistical hypothesis testing (confirmatory data analysis) and more emphasis needed to be placed on using data to suggest hypotheses to test.

• Introduction to Deadweight Loss

  • Deadweight loss is the decrease in economic efficiency that occurs when a good or service is not priced at its pareto optimal level.
  • Deadweight loss is the decrease in economic efficiency that occurs when a good or service is not priced and produced at its pareto optimal level.
  • In a perfectly competitive market, products are priced at the pareto optimal point.
  • the point on the supply curve where the y-coordinate equals the non-pareto optimal price;
  • the point on the demand curve where the y-coordinate equals the non-pareto optimal price.

• Consumer Purchasing Behavior

  • Examples of Social Functions: Decisiveness, neutrality, anonymity, monotonicity, unanimity, homogeneity and weak and strong Pareto optimality.
  • Relationship marketing is an influential asset for customer behaviour analysis as it has a keen interest in the re-discovery of the true meaning of marketing through the re-affirmation of the importance of the customer or buyer.
  • Some specifications of the social functions are decisiveness, neutrality, anonymity, monotonicity, unanimity, homogeneity and weak and strong Pareto optimality.

• Trade Leads to Gains

  • An allocation of resources is Pareto efficient when it is impossible to make any one individual better off without making at least one individual worse off.
  • Similarly, an action that makes at least one party better off without making any individual worse off is called a Pareto improvement.
  • It is commonly assumed that outcomes that are not Pareto efficient are to be avoided, and if a Pareto improvement is possible it should always be implemented.
  • One way to look at whether a transaction is a Pareto improvement is to ask whether it increases consumer or producer surplus without decreasing either party's surplus.
  • Lowering an item's price without changing the quantity sold, for example, may increase consumer surplus, but is not a Pareto improvement because producers suffer negative consequences.

• Market Exchange and Efficiency

  • Therefore, any voluntary exchange must lead to Pareto superior results.
  • Voluntary markets of goods with nonattenuated property rights are consistent with the Utilitarian Ethic and Pareto Efficiency.

• Definition of Perfect Competition

  • Perfect competition is a market structure that leads to the Pareto-efficient allocation of economic resources.
  • Perfect competition leads to the Pareto-efficient allocation of economic resources.

• How Taxes Impact Efficiency: Deadweight Losses

  • In economics, deadweight loss is a loss of economic efficiency that can occur when equilibrium for a good or service is not Pareto optimal.
  • In economics, a deadweight loss (also known as excess burden or allocative inefficiency) is a loss of economic efficiency that can occur when equilibrium for a good or service is not Pareto optimal (resource allocation where it is impossible to make any one individual better off without making at least one individual worse off).