As a follow up to the article on the Pareto optimum, I wanted to share an easy and accurate way to calculate it.
First, determine the parameters you want to measure against. In this case, I took the countries of a sales analysis I recently worked on. Then you sum up the field you want to measure, in this case these are the sales. Rank the countries according to their sales, then calculate their relative percentage, as shown in this table.
Chart the cumulative percentage together with the sales. All of a sudden, the Pareto principle becomes clear. The first 3 countries, so 21% of the total, represent 68% of the total sales. Admittedly not exactly 80-20 but you get the groove…