Theoretical foundation of the 80/20 rule |
| |
Authors: | Ye-Sho Chen P. Pete Chong Yueguo Tong |
| |
Affiliation: | (1) Department of Quantitative Business Analysis, Louisiana State University, 70803 Baton Rouge, LA, (USA);(2) Department of Operations and Information Systems, School of Business, Gonzaga University, 99258-0001 Spokane, WA, (USA) |
| |
Abstract: | A rigorous analysis of the 80/20 rule is made using an index for the observed values of the variables. Three important findings are identified. First, a sufficient condition is provided for Burrell's inverse relationship between minimum holdings and average circulation rate. Second, an indexed version of Lotka's law is used to derive a sufficient condition for Egghe's finding on the 80/20 rule. Third, through the computer simulations of the Simon-Yule model of Lotka's law, we identify the entry rate of new holdings as well as the number of circulations when the entry rate is a decreasing function to be crucial factors for the pattern of the 80/20-type curve. |
| |
Keywords: | |
本文献已被 SpringerLink 等数据库收录! |
|