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Pareto's law

A concept developed by the Italian economist Vilfredo Pareto (sometimes called the 20-80 rule) describing the frequency distribution of an empirical relationship fitting the skewed concentration of a variate-values pattern. The phenomenon wherein a small percentage of a population accounts for a large percentage of a particular characteristic of that population is an example of Pareto's law. When the data are plotted graphically, the result is called a maldistribution curve. To take a specific case, an analysis of a manufacturer's inventory might reveal that less than 15% of the component part items account for over 90% of the total annual usage value. Other analyses may show that a small percentage of suppliers account for most of the late or substandard deliveries; a few engineers get most of the patents; a few employees are responsible for most of the quality rejects, errors, accidents, absences, thefts, and so on.

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  • Francisb
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