The chase strategy is mostly used in service based industry that concentrate on meeting demand. Due to the unforeseen forecast, the company must hire and fire their employee to meet the production needs. United parcel service and Wal-Mart are examples of companies that use chase strategy.
What types of industries or situations are best suited to the chase strategy?
The chase strategy should be used when the cost of carrying inventory is very high and the costs to change levels of machine and labor capacity are low. This strategy works in the automotive sector, durable goods, and consumer electronics.
When should chase strategy be used?
The use of a chase strategy requires that a company have the ability to readily change its output level, which means that it must be able to readily change its capacity. In some industries where labor is the major determinant of capacity, and where additional labor is readily available, such changes may be feasible.
What is a chase strategy?
The chase strategy refers to the notion that you are chasing the demand set by the market. Production is set to match demand and doesn’t carry any leftover products. This is a lean production strategy, saving on costs until the demand – the order – is placed.
What are the main differences between Chase strategy & level strategy?
Under the chase strategy, production is varied as demand varies. With the level strategy, production remains at a constant level in spite of demand variations. In companies that produce to stock, this means that finished goods inventory levels will grow during low demand periods and decrease during high demand periods.
What is a chase demand capacity plan?
With the level strategy, production remains at a constant level in spite of demand variations. The use of a chase strategy requires that a company have the ability to readily change its output level, which means that it must be able to readily change its capacity.
What is a pure chase strategy?
Pure chase strategy is a strategy that the company produce to exact monthly production requirements using a regular ten-hours a day by varying workforce size. Because the company produce exact monthly demand by varying workforce, so there are no overtime, stockout, subcontracting, or inventory occur.