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Pareto Analysis
Pareto Analysis also known as ABC Analysis is based on20-80 Rule.
If observed carefully in every aspects of our lives - this rule holds true.
In nutshell It says80% outcome is attributed to20% of reasons.
For example If we analyse Stores operations and we do an analysis of various parts being stored and its cost, we may find that80% of the Items contribute to20% cost locked in various items in stores and20% of the items contribute to80% of the cost. so If we wish to reduce cost, we should focus on these20% items.
One more example which i found our day to day lives. now days there are so many posh malls have come up where many high street brands have opened shops. if we do analysis of people visiting these malls- we may find that80% of people just come there for window shopping or for just hanging out in food courts but20% of the people who actually come to these malls contribute80% of the revenues for these malls.
Regards,
Sameer Golam
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