PARETO ANALYSIS APPLIED TO A PRODUCTION LINE OF

REFRIGERATORS

Andrea Caldern Yepes

Universidad del Norte
acalderonc@uninorte.edu.co

Andrs Holgun Kaspersson

Universidad del Norte
aholgin@uninorte.edu.co

Daniel Idarraga Cohen

Universidad del Norte
didarraga@uninorte.edu.co

Andrs Palma Blanco

Universidad del Norte
acpalma@uninorte.edu.co

September 3, 2016
Barranquilla Colombia

Abstract

Keywords: Pareto analysis, cause-effect diagram, total quality management, critical

success factors
Introduction
Quality is defined as the measurement in which a product or service meets the purposes for
it was created, giving satisfaction to the customer. If a manufacturing company doesnt give
the products quality the attention it deserves, it may result in multiple costs for repairs, and
additional inspections. This is why there is a concept named Total Quality Management
(TQM), it focuses in fostering a culture that is not only oriented in minimizing the real cost
of production, but increasing customer satisfaction [1], really taking into account what
should be the priority to a company, apart for making profit from the activity.
The way TQM is put into practice its not always the same. It depends on the industry, the
type of enterprise and the manager perceptions of TQM, but even with that, all TQM
system have common elements that include built-in quality, management commitment,
competitive benchmarking, quality control training, statistical process control, and others
[2]. In this case the company reports defects in the fridges that are causing complaints and
are evidence that there is something that its not right, so the main objective in this paper is
to find which are the causes that are generating the problems, and propose possible
solutions to the ones that are more important.
A cause and effect diagram is helpful identifying the causes and the effect they generate,
allowing to visualize them and making easier the usage of quality control tools that describe
a problem. An important tool that helps to identify de main causes that generate the effects
is a Pareto analysis. It ranks the data classifications depending on the frequency from the
highest to the lowest, allowing to identify the vital few items that occupy a substantial
amount of the cumulative percentage and can help the company to emphasize in the real
important causes. [3]

Using these tools, the critical success factors should be identified, and therefore the
solutions wont be focused in every possible cause, generating an effective use of resources
oriented on improving the quality of the product.
Methodology
With the objective of achieving the total quality management (TQM), this study and the
improvement proposal will be focused in a Pareto analysis. It will provide along the cause
and effect diagram the information about which of the critical success factors (CSF)
represent the vital few that should be dealt first so that the satisfaction of the customer with
the offered product can be guaranteed, most of the times the imperfections in the final
product come from the raw material or in the early stages of the manufacturing process,
these variations get accumulated as the product is processed leading to a different outcome
from what was planned in the design process [5]. An evaluation will be made in order to
know whether the company is able to solve its most vital CSF based on its monthly profit.
The comparison between the cost of the solution and the current costs that the company is
facing will tell the best option for them, taking into account the fact that the clients
satisfaction is an important matter to the manufactures.
Study Case
The study case in this paper refers to a fridge production line which is showing some
defects that are causing loses to the company, because of the clients complaints. The
manufacturer decided to classify all possible defects in a list, in order to let the inspector,
check every fridge that come out of the production line and write down which of them they
show.
The data of the defects is given and shown in chart x, as well as the production costs and
defects costs in chart xx and chart xxx. Also the information about the monthly percentage
of fridges that are returned from the costumers.
Chart x. List of the defects present in the fridge production line.

Type of defect

Details of the problem

Frequency

Cumulative
percentage

Engine doesnt stop

Doesn't cool

Engine doesn't stop after reaching the

goal temperature
The engine starts, but the fridge doesn
t cool

Defective
compartment
Defective painting
Scratches
Door doesnt close
Doesnt work
Defective drawer
Bad leveling
Engine doesnt start
Others
Defective door
Total

Broken compartment
Painting defects on the external
surface
Scratches in the external surface
Door doesn't close correctly
The engine doesnt start after
plugging in the fridge
Lower drawers broken
The fridge swings and cant be
leveled
Engine doesn't start after the stop
cycle
Defects not included in the others
Fridge door doesnt close
hermetically
Total

36

41%

27

72%

82%

88%

4
2

92%
94%

97%

98%

99%

100%

100%

100%

88

Chart xx. Costs of repairing each type of defect.

Defects
Defective compartment
Defective painting
Defective drawer
Bad leveling
Engine doesnt start
Engine doesnt stop
Doesn't cool
Others
Defective door
Door doesnt close
Scratches
Doesnt work

Chart xxx. Production costs.

Cost in thousands of
Colombian pesos
100
55
20
10
10
400
350
15
5
33
24
15

Weekly units

750

Weekly production
$ 1.125.000.000,00
costs
Weekly repairing costs
$ 74.664.000,00
Monthly gain
$ 13.500.000.000,00
Refund costs
$ 1.440.000.000,00
Monthly utility
$ 7.261.344.000,00

Analysis
In first place image x shows the cause and effect diagram.

Image x. Cause and effect diagram

Given the data of the number of defects which may be present on the fridges produced by the company the first step is to analyze the
Pareto of these. The Pareto diagram helps to identify which of the 12 defects produce the maximum of complaints from the clients.
With the data shown in chart x we proceed to draw the corresponding diagram.

Pareto analysis applied to a fridge production line

100%

35

90%

30

80%
70%

25

60%

20

Defect frecuency

50%

15

40%

10

30%
20%

10%

0
Engine doesn't stop after reaching the temperature

0%

Type of defect
Frequency

Cumulative percentage

Diagram x. Pareto analysis applied to fridge production.

As shown in diagram x the defects that cause 82% of the complaints are engine doesnt
stop, the fridge doesnt cool and defective compartment, which are only 25% of the causes.
Thereby the recommendation is to focus on solving these three problems.
Regarding the costs of fixing the problems ahead mentioned, based on chart xx it is clear
that those are the defects generating more costs to the company. More exactly, the cost of
repairing the three principal defects in the amount of fridges that would be sent back from
the 750 units produced each week is COP 61.200.000. This sum taking up 81,97% of the
total weekly repair cost.
From the data in chart xxx and knowing that 9,6% of the fridges that go to the clients are
sent back because of disconformities it is obtained the average equivalent cost of producing
one good refrigerator, which is COP 2.300.389.
After seeing the amount of money that the company is investing in constantly repairing
each nonconforming product and the cost of producing one without any problems its easier
to come up with a solution that might increase the production cost and lower the amount of
repairs that needs to be done. This costs can be increased by buying new machines or

components with a higher quality and price, or doing more thorough inspections in every
step of the production. It is also important to remark that having a high cost of production is
better than having a high one of repairing the damaged refrigerators because in a
competitive market the quality of the products sold by any company is highly noted by the
costumers thus increasing its sales as well as the possible amount of future costumers.
As for the probable cause of the problems and therefore its solution there is a possibility
that both first and second defects are related and come from the fact that the thermostat on
the refrigerators isnt working correctly. Another possible cause of these two problems
might be the malfunctioning of the cooling liquid. In terms of the third problem this could
be something caused by a malfunctioning of a machine in the force it is using for putting
them in, or mismanagement in the transportation from the factory to the clients facilities.
To solve the first two problems, the company could decide to change the thermostats
providers.
Conclusions

[1] Khan, J. H. (2003). Impact of total quality management on productivity. The TQM
magazine, 15(6), 374-380.
[2] Radovilsky, Z. D., Gotcher, J. W., & Slattsveen, S. (1996). Implementing total quality
management: Statistical analysis of survey results. International Journal of Quality &
Reliability Management, 13(1), 10-23.
[3] Karuppusami, G., & Gandhinathan, R. (2006). Pareto analysis of critical success factors
of total quality management: A literature review and analysis.The TQM magazine, 18(4),
372-385.
[4]

[5] Nguyen, D. S. (2014, December). Total quality management in product life cycle.
In 2014 IEEE International Conference on Industrial Engineering and Engineering
Management (pp. 754-758). IEEE.