Which of the following is true of the 80-20 rule?
A) A company should order 80 percent of its supplies from one supplier, and the remaining 20 percent from other suppliers.
B) 80 percent of a company's income comes from 20 percent of its products.
C) The cost of raw materials should be about 80 percent of the cost of the finished product, and the cost of manufacturing should be about 20 percent of the cost of the finished product.
D) A company should schedule 80 percent of its production during 20 percent of the work week.

Question

Quizplus · Accepted Answer

The 80-20 rule, also known as the Pareto principle, states that 80 percent of a company's income comes from 20 percent of its products. This principle can also be applied in other areas, such as 80 percent of customer complaints coming from 20 percent of customers or 80 percent of a company's expenses coming from 20 percent of its activities. Option A, C, and D are not accurate descriptions of the 80-20 rule.

Which of the Following Is True of the 80-20 Rule