Firms’ plan and schedule production quantities using different strategies. Some firms make goods only after receiving a customer order (make-to-order), while others make goods and distribute them to retailers where customers buy at their discretion (make-to-stock) (Hamlett, 2014). This reflection will discuss different firms that use the chase strategy to plan inventory and production levels.
What is chase strategy?
Chase strategy is the process that firms use to meet demand. In chase strategy inventory and production will increase or decrease as demand increases or decreases. Chase strategy requires that a company have the ability to readily change its inventory and output level(s) as demand changes, which means that it must be able to readily change its capacity. If the additional inventory is readily available, the ability to change quantities as demand requires is a viable proposition. However firms must take into consideration, available staff to produce to demand and they must be able to make equipment and facilities available.
Examples of the chase strategy – Company 1
One type of company that uses the chase strategy is an online jewelry boutique. When purchasing jewelry from an online boutique, the owner will only place your order once you have decided what pieces you are interested in and at that time an invoice is sent to you to pay for your order. Companies such as these conduct business this way because there is less risk of a customer ordering and saying they will pay once the order has been fulfilled and not holding up their end of the bargain. This way the boutique is not stuck with an overstock of jewelry that they may not be able to sell in the future. The make-to-order strategy is part of the chase strategy. Companies that use a make-to-order strategy produce goods after receiving an order from the customer. Most often a company that uses the make-to-order strategy produces one-of-a-kind goods. Examples include...