Chase Strategy
Planning is one of the integral building blocks for a business in order to maintain and sustain its position in the marketplace. In fact, workforce level, production rate, and inventory level are the three fundamental components involved in the planning process. These elements enable the organization to fulfill the market demands. In other words, the planning process of the enterprise is executed to match the supply to the demand pattern. However, the organization aims to achieve it at minimum costs with maximum profits and customer satisfaction (Kachru, 2009).
At many instances, it has been observed that the organizations face exigent challenges and difficulties in their planning process of production when matching up to the demands. This usually is experienced by the manufacturers and service providers because the demand pattern for certain products or services (especially that are seasonal products such as snow blowers) has been monitored to be fluctuating throughout the year (Kachru, 2009).
Therefore, in order to meet the demands of the customers, different organizations use different planning strategies so that their production can match to the demands. Few enterprises opt for preparing or manufacturing a product according to the demand of the customers, while, other organizations manufacture in bulk quantities and have a great deal of inventory with them for their customers (Kachru, 2009).
Considering the case where the demand is not constant, 'chase strategy' has been observed to be used as an effective production planning approach by numerous organizations in diverse industries. Organizations particularly adopt and employ chase strategy when the demand pattern of their product all over the year is fluctuating and unstable. In other words, the unpredictable forecasted demand pattern is the key area of focus for the organizations which needs to be matched to the production capacity. Due to this reason, the production pattern is also varied (is increased as well as decreased) according to the fluctuations in demand. This is very much dissimilar to other...
This means that the organizations produce or prepare products to the exact quantity that are needed to fulfill the market demands. One of the benefits of using chase strategy exhibits that the organizations would incur low investments to inventory and minimizes the inventory levels, since the production capacity is to match the demands. As an outcome of it, the organizations are not likely to encounter product shortages from their inventory. In addition, the low costs of inventory also lead the organizations to economize their capital that is usually associated with the holding of stockpile such as purchasing of raw materials or warehousing (Swamidass, 2000).
Chase strategy applies various methods (with respect to workforce) to meet the demand to the production and to control the output. The organizations usually hire part-time workers, subcontractors, overtime intervals, and hire and layoff employees' from time to time in order to manipulate the capacity with the demand. Therefore, this strategy would prove to be effective, beneficial, and cost effective for the industries during the time when unemployment rate is high or the industry requirement is for low-skilled labors (Swamidass, 2000).
Moreover, the chase strategy is also beneficial to the organizations because the matching demand and supply approach of the strategy leaves a lesser chance of supplying obsolete merchandize to the customers. Furthermore, the organizations using the chase strategy are also not backlogged with orders because they match the production capacity as soon as they are loaded with the demand, and hence, backorder levels are also minimized (Swamidass, 2000).
Numerous organizations in the current epoch has adopted and implemented chase strategy with the prime objective to lower overall costs of production and meet the forecasted demand. In this regard, chase strategy is widely and mainly used by…
