Eighty/Twenty Rule

Eighty/Twenty Rule:

Also called ‘Pareto analysis’, this is a maxim which states that 80 per cent of benefits, or disbenefits, tend to come from 20 per cent of items. Thus, 80 per cent of total profit tends to come from 20 per cent of items stocked or made and 80 per cent of breakdowns come from 20 per cent of the machines. The value of Pareto analysis is that it indicates clearly to managers that their efforts are best spent on the key 20 per cent rather than spread too thinly.