The Pareto principle is best applied to which of the following inventory systems?
A) EOQ
B) Fixed-time-period
C) ABC classification
D) Fixed-order quantity
E) Single-period ordering system

Question

Quizplus · Accepted Answer

The Pareto principle, also known as the 80/20 rule, states that roughly 80% of the effects come from 20% of the causes. In inventory management, the ABC classification system is based on this principle and seeks to prioritize inventory items based on their value or contribution to the overall inventory cost. It categorizes inventory items into three groups: A (most valuable), B (moderately valuable), and C (least valuable). This system allows managers to focus on managing the more important inventory items and ensure that the most valuable items are always in stock. Therefore, the Pareto principle is best applied to the ABC classification system.

The Pareto Principle Is Best Applied to Which of the Following