Companies use different production and scheduling planning strategies to produce goods matching the levels of demand. These levels of production are set by a forecasting system like made-to-order, make-to-stock, and assembly-to-order. A chase strategy involves matching production demands and capacity from one period to the next. This strategy is mostly used when demand is unstable and there is no inventory. Most industries that have little variations find it difficult to operate a chase strategy and accrue production and inventory costs. However, if businesses can match demand with capacity it’s a good strategy. Mobile vendor service industries use chase strategies, because of its variable demands cost of inventory is low. The customer demand may vary for this service during different periods of the year, thus requiring flexibility in operations and capacity of trucks. Some challenges are unpredictable locations of patron, layoffs and hiring.
Team C wrote the last reflection about the Tesla Motor company, which is a supreme example in which the demand is fully met because the customer orders the car to exact specifications. This allows Tesla to keep inventory fairly low while optimizing their goals with lower overhead. The chase strategy is best exemplified by the fast food industry, in which case a meal is prepared once it is ordered. It would not be a great model to have every food choice on the menu prepared only to sit around until ordered. Knowing that this brings about fluctuations, the company adjusts to meet the demand and stay on budget by hiring or firing employees. The effects of such variable demand manifest as low morale, high turnover, and possible complications with labor unions.
The Term Paper on Lead Time Jit Production Inventory
JUST-IN-TIME INVENTORY Intro/Background: The management of inventory is a problem common to all business organizations. Basically, inventory is a resource idle for the present but useful for the future. If it is for the future, then why store it now physically and incur costs? Why not procure it only when needed? These questions lie behind the philosophy of Just-in-Time (JIT). JIT is a process for ...
