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  Dictionary  »  Letter E  »  eighty/twenty rule

eighty/twenty rule

It is common for a small quantity to account for most of the value. Examples: 20% of the people may have 80% of the wealth; 20% of the members do 80% of the work; 20% of the items in inventory account for 80% of the sales; 20% of your customers generate 80% of your sales; 20% of your customers cause 80% of your headaches, etc.


This rule allows managers to monitor 80% of the value by monitoring approximately 20% of the items.


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