Question

One of the main issues with many corporate planning strategies is to try to balance the “supply and demand’ requirements within the constraints imposed by their policies and cost controls. This requires examination of various potential alternative tactical approaches to meet the corporate strategy.  Compare the advantages, disadvantages, and capacity issues between the “chase” and the “level” models.

Answer 1

Level strategy is where a firm produces certain amount of products and maintains the excess in inventory so that they can be used in higher demand days . Chase strategy is where a company produces products as per the demand and hires more workers when demand is high and lays off the worker when there is no demand.

Advantages of level strategy is that the inventory levels will always be high and hence it can meet the demand comfortably.

Advantages of chase strategy is the inventory cost is low when compared to level strategy .

Disadvantages of level strategy is the high costs required for inventory and some of the resources might go wasted while the disadvantages of chase strategy is that employees would be dissatisfied with sudden lay offs and also fluctuations will be there both in work and cost .

The capacity maintained in level strategy us steady while in chase the capacity suddenly increases and decreases making it unstable. Hence the advantages of one becomes the disadvantages of the other and hence proper strategy must be chosen depending on the business.