Pareto analysis

Pareto analysis is a method of analysis based on the concept that 20% of the variables included in an analysis are responsible for 80% of the results. For example, 20% of all customers are responsible for 80% of all customer service activity, or 20% of all inventory items comprise 80% of the inventory value. Pareto analysis is used to concentrate management attention on those issues having the greatest impact on an organization.

Similar Terms

Pareto analysis is also called the 80/20 rule.