Question 7

Chase strategy

The chase strategy is an aggregate planning approach that adjusts output to match demand fluctuations by hiring and laying off workers as needed each month. This method is particularly useful for companies that experience variable demand.

A) Chase strategy

This option is correct because the chase strategy specifically involves altering workforce levels to align production with changing customer demand. By hiring more workers during peak periods and laying them off during slower periods, businesses can maintain efficiency and minimize inventory costs.

B) Level strategy

This option is incorrect as the level strategy maintains a steady output level regardless of fluctuating demand. Under this approach, a company produces at a constant rate, which can lead to excess inventory during low demand periods or stockouts during high demand, but does not involve hiring or laying off workers frequently.

C) Mixed strategy

This option is also incorrect since the mixed strategy combines elements of both the chase and level strategies. While it may involve some level of adjusting workforce or output, it does not specifically focus on hiring and laying off workers each month as a primary method.

D) Outsourcing strategy

This option is incorrect as the outsourcing strategy involves contracting external organizations to handle production or services rather than modifying internal workforce levels. It does not pertain to the direct hiring or laying off of employees.

Conclusion

The chase strategy is the most effective approach for managing workforce levels in response to changing demand, as it directly addresses the need for flexibility in hiring and layoffs. Other strategies, such as the level and mixed strategies, do not implement this specific workforce adjustment, making them less suitable for the scenario presented.