Finance:Pareto priority index
From HandWiki
The Pareto priority index (PPI),[1] so named because of its connection with the Pareto principle, which is in turn named after the economist Vilfredo Pareto, can be used to prioritize several (quality improvement) projects. It is especially used in the surroundings of six sigma projects. It has first been established by AT&T.[citation needed]
The PPI is calculated as follows:
- [math]\displaystyle{ \text{PPI} = \frac{\text{savings} \times \text{probability of success}}{\text{cost} \times \text{time of completion}} }[/math]
A high PPI suggests a high project priority.
References
- ↑ Gryna, Frank M. (2001). Quality planning and analysis : from product development through use (4. ed.). Boston, Mass. [u.a.]: McGraw-Hill. p. 61. ISBN 978-0070393684.
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