Pareto principle
Proper noun
Meaning
the Pareto principle
The principle that describes the phenomenon wherein a small percentage of a population accounts for a large proportion of a particular characteristic of that population.
Synonyms
Examples
As applied to income, the Pareto principle is sometimes stated in popular expositions by saying 20% of the population has 80% of the income.
In 1906, he made the famous observation that twenty percent of the population owned eighty percent of the property in Italy, later generalised by Joseph M. Juran into the Pareto principle (also termed the 80–20 rule ).
The Pareto principle serves as a baseline for ABC-analysis and XYZ-analysis, widely used in logistics and procurement for the purpose of optimizing stock of goods, as well as costs of keeping and replenishing that stock.
It is a statistical tool that graphically demonstrates the Pareto principle or the 80–20 rule.
Pareto principle has also been applied to training, where roughly 20% of the exercises and habits have 80% of the impact and the trainee shouldn't focus so much on a varied training.
The Pareto principle was named after him and built on observations of his such as that 80% of the land in Italy was owned by 20% of the population.