Certified Production & Operations Manager (POM) Practice Exam

The idea that a few improvements in key areas have more impact than many improvements in other areas is known as:

1. Pareto phenomenon

2. Tellier phenomenon

3. Stevenson phenomenon

4. Adam Smith phenomenon

The correct answer is: Pareto phenomenon

The idea that a few improvements in key areas have more impact than many improvements in other areas is known as the Pareto phenomenon, often referred to as the Pareto principle or the 80/20 rule. This concept was formulated by Italian economist Vilfredo Pareto, who observed that a significant portion of effects often comes from a small percentage of causes. In practical terms, this means that in many situations, approximately 80% of the results come from 20% of the efforts or inputs. In the context of operational management and process improvement, applying the Pareto phenomenon helps organizations focus on the most impactful changes that can lead to significant improvements in efficiency, productivity, and overall outcomes. By identifying and prioritizing these key areas, resources can be allocated more effectively, enabling organizations to achieve substantial gains without spreading themselves too thin across less impactful improvements. This strategic approach is essential for successful management practices in a competitive environment.