CPIM Practice Exam

What is a common challenge faced when employing a chase production strategy?

1. High levels of inventory

2. Unforeseen demand fluctuations

3. Excessive labor costs

4. Difficulty in scheduling workforce

The correct answer is: Unforeseen demand fluctuations

A chase production strategy involves adjusting production rates to match changes in customer demand. This approach aims to minimize inventory levels by aligning output closely with sales, which can lead to a more efficient operation. However, one of the primary challenges associated with this strategy is dealing with unforeseen demand fluctuations. When demand does not follow expected patterns—whether due to seasonal changes, economic shifts, or sudden market trends—companies may struggle to keep pace with production needs. This can result in stockouts when demand exceeds production capabilities, leading to potential lost sales and customer dissatisfaction. Conversely, if demand drops unexpectedly, the company may find itself with underutilized resources and potential layoffs, which can affect employee morale and operational efficiency. In a chase production strategy, accurately forecasting demand is crucial to avoid these pitfalls. While other challenges, such as excessive labor costs or difficulties in scheduling the workforce, can also arise from this production method, the most significant issue tends to stem from the unpredictable nature of demand itself. This makes addressing unforeseen demand fluctuations the most pertinent challenge in the context of a chase production strategy.