The Pareto Principle, broadly speaking, is also known as (choose two):

The Pareto Principle, broadly speaking, is also known as (choose two):
A . ABC Analysis
B . The Rule of Three
C . The 80-20 Rule
D . Value Analysis

View Answer

Answer: A, C

Explanation:

Pareto Analysis is sometimes known as the 80-20 Rule. It is the basis of ABC Analysis.

‘in any series of elements to be controlled, a selected small factor [say 20%] in terms of number of elements almost always accounts for a large factor [say 80%] in terms of effort’. The figures in square brackets are illustrative – Pareto did not include these numbers and the % can be otherwise. The principle that a small percentage of ‘things’ will soak up a large amount of resource is what actually matters.

For example, if you have 100 suppliers, a disproportionate amount of energy / time / spend will be devoted to a small number of them. Similarly if you have 100 staff members. Or a stock range of thousands. Similarly for customers. And so on.

A relatively simple concept, worth it’s weight in gold in my opinion – my favourite management concept.