Question

A firm uses the chase strategy of aggregate planning. It produced 1000 units in the last period. Demand in the next period is estimated at​ 800, and demand over the next six periods​ (its aggregate planning​ horizon) is estimated to average 900 units. Which of the following tactics would be most representative of following a chase​ strategy?A. add 200 units to inventory in the next period B. implement a lower price point to increase demand C. add 100 units to inventory in the next period D. lay off workers to match the 200-unit difference E. hire workers to match the 100-unit difference

Answer 1

The most representative tactic of following a chase strategy would be to hire workers to match the 100-unit difference in demand.

Step-by-step explanation:

In this scenario, the firm is using the chase strategy of aggregate planning.

The chase strategy involves adjusting production levels to match the forecasted demand.

Since the demand in the next period is estimated at 800 units and the average demand over the next six periods is estimated to be 900 units, the firm should adjust its production to match the demand.

Therefore, the most representative tactic of following a chase strategy would be to hire workers to match the 100-unit difference in demand.