Final answer:
In a level strategy, the production rate remains constant from month to month to stabilize the production process. This manages inventory levels to cope with demand fluctuations. A price ceiling does not directly shift supply or demand; it sets a cap on price.
Step-by-step explanation:
In a level strategy, a company aims to maintain a consistent production rate despite fluctuations in demand. This means that the company will produce at a steady rate and use inventory levels to absorb differences in demand. When demand is lower than the production rate, the company will build inventory, and when demand is higher, the company will deplete the inventory rather than change the production rate.
The final answer in a two-line explanation in 300 words is that in a level strategy approach, the production rate remains constant from month to month. The aim is to maintain a stable workforce and production level, minimizing costs associated with overtime, hiring, and layoffs, which can fluctuate with a chase strategy that aligns production directly with the demand rate. Therefore, the correct choice is (c) production rate.
To talk briefly about the other parts of the question that mentioned the adjustment process in a constant-cost industry, they provide context for how supply and demand can affect prices in various industries. However, these parts are not directly related to the question about a level strategy in operations management.
Regarding the question about the effect of a price ceiling, a price ceiling is a government-imposed limit on how high a price can be charged for a product. This does not shift the supply or demand curve directly; instead, it creates a maximum price that can affect the market by leading to a shortage if it is set below the equilibrium price. Hence the correct answer is (d) neither.