Starlight Homes Inc. is a building contractor specializing in upscale homes in the Southwest. Before each new home is sold, Starlight conducts a final inspection of the home and repairs any defects. In addition, Starlight receives a “punch list” of defects (to be corrected) compiled by the buyers following the sale. Ricardo Alvarez, Starlight’s lead supervisor, has concluded that even if it should cost more to do the work right in the first place, it will be a lot cheaper than going back later to fix the defects. In an effort to reduce costs, improve the quality of Starlight’s homes, and reduce the number of complaints after the sale, Ricardo has assembled data from his final inspections and the punch lists for the last 20 homes sold. These data are listed in the following chart:

Construct a Pareto chart to illustrate the defect types by number of defects. Which two defect types appear to be the most significant? Should Ricardo focus his attention on these two categories of defects? Ricardo decided to stratify the Pareto chart by cost before making any decision. His bookkeeper developed the average cost per repair event per category. The data are shown here:

The second-level chart developed from these numbers should show Ricardo which two or three defect types are the most significant in terms of cost, enabling him to put his efforts where they will do the most good. What are they? Was Ricardo justified in going to the second level (of stratification) before making a decision on where to focus his efforts? Why?

Defect Type Occurrences Defect Type Occurrences Damaged Walls 13 Doors 14 Exterior Paint HVAC 11 Plumbing 33 Roof 3 Caulking 28 Masonry 2 Electrical 25 Interior Paint 61 Cabinetry 12 Landscaping 16 Woodwork 46 Fixtures LO