# W20_EDN_Pareto Chart

1.       Problem Definition

My colleague and I examine why under-served communities do not have a routine habit to save money. Just like I said in blog posted June 9, 2012, we have conducted a phone survey to understand what problems under-served communities are having.

Problem Statement: What are the key problems?

2.       The Feasible Alternatives

Based on the problem, I identify two possible results:

1. The result shows the people do not have any problems with saving habit.
2. The result shows the people faced a problem when it relates with saving habit

3.       Tools and Technique

To answer the problem, there are several steps to solve the problem using Pareto Chart:

• Collect sample data;
• Based on data collection, determine problem category and frequency;
• Draw the Pareto Chart from the frequency table; and
• Interpret the Pareto Chart.

4.     Selection of the Acceptable Criteria.

Table 1 shows the problem category and frequency table which we collected from phone survey respondents.

Table 1: Problem Category and Frequency Table

We decided the problem categories on the horizontal line (x axis) and the frequencies on vertical line (y axis). Then, we draw the Pareto Chart.

Figure 1: The Pareto Chart

Figure 1 shows the frequency of there is no reason to save money is the highest (35) among others. The tallest bar indicates the biggest contributors to the overall problem. The phone survey shows that under-served communities are having a problem with motivation or goals to save money for future needs.

5.       Post-Evaluation of the Result

The under-served communities are the most vulnerable groups in our societies. Based on the calculation above, the result shows the under-served communities think that there is no reason to save money. The policy makers on banking sectors should evaluate is the current campaign to save money sufficient enough for under-served communities and think the effective campaign to raise awareness the importance to save money for future needs.

There is a clear distinction between the Histogram on blog posted June 9, 2012 with the Pareto Chart. The Histogram only displays the frequency distribution, whereas the Pareto Chart analyzes the frequency of problems.

6.       References

Brassard, M. & Ritter, D. (2010). The Memory Jogger 2: Tools for Continuous Improvement and Effective Planning, pp. 122-135.