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- Title
Pareto Distribution-Based Shewhart Control Chart for Early Detection of Process Mean Shifts.
- Authors
Saghir, Aamir; Rao, Gadde Srinivasa; Aslam, Muhammad; Janjua, Azhar Ali
- Abstract
The Pareto distribution is of paramount importance in actuarial science, wealth distribution, finance, etc. This paper introduces a control chart inspired by Shewhart's methodology, designed for monitoring shifts in the Pareto distribution through a repetitive sampling approach. The chart employs a modified statistic that combines shape and threshold parameters as its plotting statistic. Coefficients for the Shewhart-type Pareto chart are computed for two-phase limits. The performance of the suggested chart is assessed in terms of run length characteristics, assuming a shift in the process mean. Additionally, we conduct an efficiency comparison with existing control charts. The findings suggest that, on average, the proposed Pareto chart demonstrates greater efficiency in promptly detecting changes compared to alternative methods. To illustrate the practical application of our approach, we present an example using revenue data.
- Subjects
PARETO distribution; ACTUARIAL science; QUALITY control charts; PERFORMANCE evaluation; COEFFICIENTS (Statistics); WEALTH distribution
- Publication
Journal of Statistical Theory & Applications, 2024, Vol 23, Issue 1, p26
- ISSN
1538-7887
- Publication type
Article
- DOI
10.1007/s44199-024-00071-1