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Correlation of the 80/20 rule

Correlation of the 80/20 rule

The 80/20 rule shows that 80 percent of revenue generate through 20 percent of certain activities.   The 80/20 rule depicts the formulations of organizational and business management especially in logistical point of view. The 80 percent of output generate though 20 percent of input. The 20 percent of inventory sales provides the high generation of values by 80 percent of revenue.  The 80/20 rule used for the increase in ROI and decrease in the acquisitions cost of the customer. 

Warehouse/Storage locations

Item Storage Distribution Level

The warehouse storage location identifies the distribution storage level for the execution of best 80/20 rule to generate high-performance output in essential and adequate manner. Different level of point centers is built for the execution of lead time efficacy. Three units of distribution of warehouses are building for the flow of material movement in an efficient way. At the C plant level whereas 10 percent slowest moving from restocking and taking customer orders.   At the B level of regional plant warehouse, which is re faster than the plant C, as the faster moving of regional warehouses collaborates, transforms into A level storage for the consolidations of fasten moving 80/20 rule, where 20 percent of fast moving based on 80 percent of sales essentially. Therefore the connection of C-level storage point with the A level storage that has less lead time which means 20 percent are the causes that generate 80 percent of tasks. 

Individual Warehouse

Item warehouse storage level

Towards individual warehouses that also provides the indication of benefits of the 80/20 rule. There are to substances in individual warehouse inbound as well as outbound logistical operations. There is three zones stated for the understanding of 80/20 rule investigation.  The zone C is that covers wide areas while the zone B initiates the implications of outbound logistics. In the zone areas of A, that specifically describes the zone of 20 percent of A items provides the 80 percent of output in good manner. In this regard, the item storage warehouse level for the 80 percent of output provides by 20 percent of input essentially. Therefore, the consolidations of zone A effectively contributes to the areas of 20 percent, but its outcomes are greater than the other comparisons. This reveals that the 80/20 rule provides the accumulation of high-value results by performing 20 percent o generate 80 percent of output. (Ballou, 2004)

Shipping levels to balance Costs

The shipping level to balance cost also provides the indication of 80/20 rule. The 10 percent of slow moving of faster shipping reveals the consolidations of two levels are removed from the customer plant storages. On the other hand, the 70 percent medium moving slightly faster shipping that reveals the level of one removal from the custom region warehouse. The logistical model towards 80/20 rule provides the less utilization of resources to generate high-performance outcomes. (ALLISON, 2012)

The results accumulation towards the 80/20 rule, where the 20 % of fastens the moving of normal shipping revels accounted for the 80 percent of sales that increase overall profitability factors. In this regard, the formulations of closest to customer forwards warehouse reduce the lad time where the capability of inbound and outbound logistics to perform in a well manner to pertain high-performance results.  Thus to sum up all discussion about the execution of correlation of 80/20 rule provides the understanding of inbound and outbound logistical operations to sustain China supply operations. The understanding of shipping level of balance cost where the accomplishment of correlation of 80/20 rule indicates the best performance characteristics in the manner of forwards warehouses options. (Ballou, 2004)


ALLISON, P. (2012). Logistic Regression for Rare Events. Retrieved May 4, 2016, from http://statisticalhorizons.com/logistic-regression-for-rare-events

Ballou, R. H. (2004). Business Logistics/supply Chain Management: Planning, Organizing, and Controlling the Supply Chain. Pearson Prentice Hall.

Jain, P. (2013). The 80/20 Rule of Analytics Every CMO Should Know. Retrieved May 4, 2016, from http://www.forbes.com/sites/piyankajain/2013/05/26/the-8020-rule-of-analytics-every-cmo-should-know/#513ede8763fb

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