CPIM Practice Exam

Which production planning strategy is most aligned with adjusting to demand variations over time?

1. Chase strategy

2. Level production strategy

3. Product-based strategy

4. Demand matching strategy

The correct answer is: Chase strategy

The chase strategy is focused on matching production levels to fluctuating customer demand, making it particularly effective in environments where demand varies significantly over time. This strategy involves adjusting production rates by hiring or laying off employees, increasing or decreasing overtime, and utilizing inventory to ensure that the production output aligns closely with current demand levels. In implementing a chase strategy, a company can reduce the costs associated with carrying excess inventory during periods of lower demand, while also minimizing lost sales during peak demand periods by rapidly increasing production. This flexibility allows businesses to respond swiftly to market changes, ensuring that they meet customer needs while keeping costs under control. The level production strategy, in contrast, involves maintaining a consistent production rate regardless of demand fluctuations, which does not directly adjust to changing customer needs over time. The product-based strategy focuses on aligning production with specific products rather than adjusting for demand changes. Lastly, the demand matching strategy aims to synchronize production with demand but may not have the same level of flexibility and responsiveness as the chase strategy in highly variable environments.