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The 80-20 rule also known as the Pareto Principle states that80% of results are attributable to20% of the causes.
he80-20 rule is frequently used in business, but has been applied to a wide variety of subjects such as wealth distribution, personal finance, spending habits and even infidelity in personal relationships.
In business, the80-20 rule helps managers narrow their focus when making decisions to improve the company. But just like the proverbial half full or half empty glass, the rule works both ways, depending on the manager’s focus.
As per this it indicates that 80% of the business is contributed by20% of the products, thus20% of the popular products in the category should be available in warehouses (Of80% of space) thus,20% of these products should be focused thus80% of sales too is already covered.
It is significant principle but has both Pros & Con's.
:-)
Basically it shows that80% of the outcome can be obtained by20% of efforts. and it very helpful tool for the time management
A rule of thumb that states that80% of outcomes can be attributed to20% of the causes for a given event. In business, the80-20 rule is used to help managers identify problems and determine which operating factors are most important and should receive the most attention based on an efficient use of resources. Resources should be allocated to addressing the input factors have the most effect on a company's final results.
80 percent happen just becuse of20% . Fore clearer under standing kindly see link below by
Mr. Randy Jeffers
https://www.youtube.com/watch?v=8tyByAbQzok
It means if there is a problem in any company or department that will be overcome with this rule that states. There is only20% reason or root of80% problem, means if we overcome the root of the problem than the problem will get to its end. So find the root or20% reason of the problem and kill the80% problem.
More popularly known as pareto analysis. It is basically a concept of long tail where top20% of products are responsible for generating80% of revenue. These are generally fast moving items and it's important for the operation team to have a check on inventory levels for that particular product. Even one loss of order for such items is a great loss in terms of revenue opportunity.