80-20 Rule is also known as Pareto's Concept. It may be simply stated as 80% of the activity is caused by 20% of the factors. Therefore, allowing managers to attack 80% of the problems.
This was proposed by an Italian scientist named Vilfredo Pareto in nineteenth century. His work focused on the inequalities in data and he proposed that most of an "activity" is caused by relatively "few" of its factors.
Pareto Chart drawn during ABC Analysis, is a bar chart on which the "Percentage of Items" is plotted in along the x-axis and "Percentage of Dollar Value" is plotted against the y-axis.
A conceptual diagram of ABC Analysis using Pareto Chart is as follows:
Also, Below is a Pareto Chart generated through a computer program computing results of ABC Analysis. As you can see below, 2 factors are used:
1- Annual Cumulative Sales on Y-Axis
2- Cumulative Number of Items on X-Axis
In order to download an excel template developed by American Society for Quality, please click on the following link:
Download Excel File
This was proposed by an Italian scientist named Vilfredo Pareto in nineteenth century. His work focused on the inequalities in data and he proposed that most of an "activity" is caused by relatively "few" of its factors.
Pareto Chart drawn during ABC Analysis, is a bar chart on which the "Percentage of Items" is plotted in along the x-axis and "Percentage of Dollar Value" is plotted against the y-axis.
A conceptual diagram of ABC Analysis using Pareto Chart is as follows:
Also, Below is a Pareto Chart generated through a computer program computing results of ABC Analysis. As you can see below, 2 factors are used:
1- Annual Cumulative Sales on Y-Axis
2- Cumulative Number of Items on X-Axis
In order to download an excel template developed by American Society for Quality, please click on the following link:
Download Excel File
Thanks! Makes sense.
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