Question

You were recently hired by a company that is interested in your knowledge of management. Your supervisor, like you, is new to the job and needs your help understanding the difference between a chase strategy and a level strategy in sales and operations planning. In your own words, explain the answer to your supervisor

5 sentences

Answer 1

In sales and operations planning, Chase strategy is undertaken to ensure that the aggregate plan is maintained. However, this plan should go along with a stable rate of production, coupled with that of a steady employment level. In this regard, the forecasting of the customers demand for sales of good shall enable the Firm to either increase or decrease the production of goods accordingly to best cater to them. It needs to maintain a steady workforce and also a constant level of output even in the state where the demand is relatively lower while when the demand increases, the same level of employment and production rate needs to be maintained while letting the inventory surplus take care of the excess demand.

On the other side, in Chase strategy, there is time on time matching done between demand in the market that could influence the sales and that of the overall capacity of the Plant. As a result, there could be significant recruiting of workers or termination of the same to match the demand and capacity process and also rise in the inventory carrying costs. This could in turn result to unionization of workers and lack of optimal utilization of the plant. However, it may also call for more flexibility in the system wherein there could be a facilitation of the inventory to be maintained even at a lower level, if desired for thereby letting the Firm relatively more amount of savings.