Pareto Distribution

This distribution is commonly used in the analysis of various aspects of per capita income, changes in stock prices, variations in the pop­ulation in a city, the patterns of staffing numbers in a company, even error rates in data communications circuits. It also represents cer­tain kinds of changes in the distribution of natural resources.

It uses the Pareto principle, based on the idea that by doing 20% of work, 80% of the advantage of doing the entire job can be generated. Or in terms of quality improvement, a large majority of problems (80%) are produced by a few key causes (20%).