Pareto Distribution-Based Shewhart Control Chart for Early Detection of Process Mean Shifts
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Date
2024
Authors
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Journal ISSN
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Publisher
Springer Science and Business Media LLC
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.
Description
Full-text. Available at https://doi.org/10.1007/s44199-024-00071-1
Keywords
control chart, pareto distribution, repetitive sampling, performance measure, average run length
Citation
Saghir, A., Rao, G. S., Aslam, M., & Janjua, A. A. (2024). Pareto Distribution-Based Shewhart Control Chart for Early Detection of Process Mean Shifts. Journal of Statistical Theory and Applications, 23(1), 26-43.