Final answer:
The correct option: The Chase Production Strategy
The Chase Production Strategy utilizes overtime and subcontracting to manage high demand periods, adjusting production rates to directly meet changes in demand.
Step-by-step explanation:
The planning strategy which uses overtime and subcontracting to cope with high demand periods is known as the Chase Production Strategy. This approach aligns production rates with demand by increasing or decreasing production as needed.
During periods when demand is higher, a business using the Chase Strategy might schedule additional work hours for its current employees, or hire temporary workers, to meet the production needs. Alternatively, they could subcontract work to external vendors to cover the excess demand.
This stands in contrast to the Level Production Strategy and the Aggregate Production Plan, which attempt to keep production steady, regardless of demand fluctuations. Opting for the Chase strategy allows firms to closely align production with customer demand, thereby reducing inventory costs, although it may incur higher labor costs or face potential quality control issues with subcontractors.