TY - JOUR
T1 - The Pareto managerial principle
T2 - When does it apply?
AU - Grosfeld-Nir, Abraham
AU - Ronen, Boaz
AU - Kozlovsky, Nir
PY - 2007/5
Y1 - 2007/5
N2 - The well-known 80/20 Pareto principle and its refinement into "A", "B", and "C" categories give rise to a managerial methodology consisting of three steps: classification; differentiation; and resource allocation. This is an easy-to-implement and extremely effective methodology. It starts with the creation of "Pareto diagrams", i.e. bar charts of attributes and their relative frequency, presented in descending order. Typically, Pareto diagrams are useful in that they provide managers with a summary of practical information, revealing critical attributes. However, sometimes a Pareto diagram is less informative than it might be, because the relative frequency is almost uniform. The objective of this article is to provide an analytical tool (an index) that employs the above-mentioned methodology to measure the closeness of empirical Pareto diagrams to an "ideal" Pareto diagram. The index developed is based upon entropy.
AB - The well-known 80/20 Pareto principle and its refinement into "A", "B", and "C" categories give rise to a managerial methodology consisting of three steps: classification; differentiation; and resource allocation. This is an easy-to-implement and extremely effective methodology. It starts with the creation of "Pareto diagrams", i.e. bar charts of attributes and their relative frequency, presented in descending order. Typically, Pareto diagrams are useful in that they provide managers with a summary of practical information, revealing critical attributes. However, sometimes a Pareto diagram is less informative than it might be, because the relative frequency is almost uniform. The objective of this article is to provide an analytical tool (an index) that employs the above-mentioned methodology to measure the closeness of empirical Pareto diagrams to an "ideal" Pareto diagram. The index developed is based upon entropy.
KW - Entropy
KW - Pareto principle
KW - Theory of constraints
UR - http://www.scopus.com/inward/record.url?scp=34247567852&partnerID=8YFLogxK
U2 - 10.1080/00207540600818203
DO - 10.1080/00207540600818203
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AN - SCOPUS:34247567852
SN - 0020-7543
VL - 45
SP - 2317
EP - 2325
JO - International Journal of Production Research
JF - International Journal of Production Research
IS - 10
ER -