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Poison grenades & Frag grenades
This is similar to the method told by Mark Evinger, in this is how I always defeat the rancor. Have one of your characters walk solo, and keep the rest safe from the Rancor. By now you should have 2 poison grenades on you, throw one at the rancor and he'll come after you. Just by using one of them he'll lose almost half of his VP. Not sure about this but I think he will be more damaged if he's moving, it may count as a round, so have him chase you to the doorway, just don't die. After the effect has worn off, throw the second poison grenade at him, and at last a regular frag grenade and he'll be gone. Don't be a coward and use the odor, you won't earn as much XP as you will if you kill him.
Extra Xp Defeating the Rancor
This is probably a glitch in the game (PC version) but it works so... first kill the Rancor for 700 exp using whichever method you prefer. Then place a grenade in the bone pile along with the 'odor'. The cut scene will play out exactly the same, sounds and all, but without the Rancor! You'll get another 200 exp.
Mission, Stealth, and Grenades
The easiest way to kill the rancor is to take Mission Vao and turn on her stealth, then have her walk into the hallway where the elevator is. Once she is there, the Rancor cannot reach her so you are free to throw grenades.
Mission, Stealth, and Mines
Have Mission go into Stealth mode and walk up just behind the Rancor. Then start setting the frag mines that you've picked up along the way in groups roughly in line to where the rest of the party is standing. I think it takes 6 or 7, but you can pick up the ones that don't explode. Return to the party then walk them forward to engage the Rancor. It's pretty sweet to watch and you get 750xp.
Grenade & Duck
I found a "simple" way to kill the rancor. Have one of your main characters walk solo and enter the room where the rancor is. Have him wait by the doorway. When you are ready, have him throw a single grenade at the rancor. As soon as you throw the grenade run back in through the door, and you will be safe from the rancor. Continue to throw grenades at the rancor in this fashion until he dies.
Frag From the Inside
The easiest way to avoid combat with the beast is to take the "Synthesized Odor" (needle type gadget) off the severed arm near the Rancor entrance. Open the door to the rancor pit and walk up to the corpse pile. The rancor shouldn't notice you this far away. Activate the pile, choose "Give Items," insert the grenade of your choice, re-activate the pile, choose to "Give Items," insert the Synthesized Odor you found, and watch the ensuing fun.