Question

Question Three: Completely and thoroughly explain how a Pareto Chart could be used to reduce the cost of a making a Very Large Boat that requires the participation of lots of different people and a lot of different types of equipment. Include a least one example of a cost reduction in the creation of a Very Large Boat.

Answer 1

Pareto analysis method is based on the 80/ 20 rule where 20 % of the factors lead to 80 % of the failure. Similarly, 80 % of the effort and time is spent on meaningless activities. In making a boat , various people and equipment are used. So when there is any deviation from the specifications that lead to defect can be because of many factors. But most of these defect will be only for a few major factors. E.g., out of 100 defects, major defects might be due to 3 or 2 factors. But if we concentrate on rectifying all the factors leading to defect, it will bear a huge cost. So Pareto analysis helps us to identify the top factors.

Here, for boat making, we look at the y-axis and see that 50 % of the defect is due to processing error, other electricals and fuel systems. So working on these will reduce the costs.