A relative frequency pareto chart consists of two graphs – a bar graph showing frequencies and a line graph showing cumulative frequencies (in percentages) over it.
We now explain how to construct a relative frequency pareto chart by means of an example.
Steps to construct a Pareto chart:
- Given the frequency table, calculate the cumulative frequencies by adding the current and previous frequencies.
- Convert the cumulative frequencies to percentage, by first dividing with the total frequency and then multiplying by 100.
- Plot the frequencies using a bar graph.
- Plot the cumulative percentages and join them by straight lines.
Suppose we are given the following data on factors influencing purchase decisions vs the number of customers.
|Factors Influencing Purchase Decisions||Number of Customers|
Step 1: We first find the cumulative frequencies by adding up the current and previous frequencies.
|Price||1216||1501+1216 = 2717|
|Brand||1040||1501+1216 + 1040 = 3757|
|TOTAL = 5498|
Step 2: We convert the cumulative percentage by dividing cumulative frequency by total frequency and multiplying by 100.
|Quality||1501||(1501/5498)*100 = 27.30%|
|Price||1216||(2717/5498)*100 = 49.42%|
|Brand||1040||(3757/5498)*100 = 68.33%|
|Service||810||(4567/5498)*100 = 83.07%|
|New Products||539||(5106/5498)*100 = 92.87%|
|Reviews||316||(5422/5498)*100 = 98.62%|
|Easy Returns||76||(5498/5498)*100 = 100%|
|TOTAL = 5498|
Step 3: We plot the frequencies using a bar graph and plot the cumulative percentages using a line graph. We obtain the relative frequency pareto chart as shown below.