A while ago, Sharon came to me asking a question regarding Pareto Chart Multiples. That is, per each category, there is a Pareto chart. And we need to create Pareto charts for all the categories. This chart allows us to quickly view the few most important factors that matter to the majority of output in each category.
Vilfredo Pareto (1848-1923) is the father of the 80/20 rule: 80% of output are produced by 20% of input. It works magically well through all the years. Using the Superstore data, I found that the top 23% of products accounts for 80% of sales as shown below.
The vertical axis is based on the cumulative sum of sales over the total sales, computing along the product dimension which is sorted by sales.
The horizontal axis is the cumulative number of products over the total number of products what are sorted the same way.
Both axis are normalized to be percentage based up to 100%.
We use this formula to determine the top % of sales and the rest. Once we set the reference % to be 80%, we can get the top % of products that contributed to the 80% of sales.
For the Pareto multiples, it's really simple to build them. Just place the Category pill on the Rows shelf. Voila we get it.
From the chart, we can easily see that the 80% of sales are from different % of products for different categories. In Binders, top 11% of products contribute to 80% of sales. In Chairs, it requires the top 48% of products.
So each category is different. But the combination of all the categories still follow the Pareto rule.
Following such an analysis, we may proceed to optimize product mix and supply chain.
Note that in each category, the sales and the # of products are different from other categories. Some categories are more important than others to the total sales. The optimization also needs to be prioritized for the most important ones. We provided sorting by sales and by the # of products in the final dashboard.
BTW, we added a US tiled map of Pareto chart by State, where we can view the Pareto distribution of Sales vs Products in each state, and how much % of products are needed to reach 80% of sales. Hover the chart to view the details in tooltips.
The workbook can be downloaded
here.
Add a comment