Chase Strategy

Chase Strategy

ELI5

Chase Strategy is like hiring helpers only when you need them:

Restaurant example:

• Tuesday (slow): 2 cooks, 1 server
• Friday (busy): 5 cooks, 4 servers
• Sunday (slow again): Back to 2 cooks, 1 server

You’re “chasing” the demand — workforce goes UP and DOWN!

Good for:

• 🍽️ Restaurants (demand changes daily)
• 📦 Amazon holidays (need 100,000 extra workers for Q4)
• 💼 Tax preparers (busy Jan-April, slow rest of year)

Bad for:

• 🏭 Factories with skilled workers (hard to hire/fire quickly)
• ⚙️ When training takes months (workers leave before you benefit)

Problems:

• Workers feel insecure (“Will I have a job next month?”)
• Hiring/firing costs money
• New workers make mistakes

Memory: “Chase the Demand” — like a dog chasing a ball!

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Mention in the Slides

Chase Aggregate Plans:

• “Produces exactly what is needed each period”
• “Sets labor/equipment capacity to satisfy period demands”
• “Disadvantage: constantly changing short term capacity” [Chapter 5, Slide 22]

Chase Plan Example:

• Period 1: 500 units × 0.64 std / 160 = 2 people (need to fire 16 people)
• Chase hires and fires staff to exactly meet each period’s demand [Chapter 5, Slide 22]

Enrichment

Chase Strategy Defined

The Chase Strategy is an aggregate planning approach that MATCHES production capacity to demand in each period by adjusting workforce and/or equipment levels.

How It Works

1. Forecast demand for each period
2. Calculate required capacity (labor, equipment) for each period
3. Adjust capacity to match — hire/fire, overtime/idle time, part-time workers
4. Produce exactly what is needed, no more, no less

Advantages

Advantage	Explanation
Minimal Inventory	Produce to demand, no buildup in low periods
Cash Flow	Less capital tied up in inventory
Obsolescence Risk	Low risk — don’t hold inventory that could become outdated
Customer Service	Can respond to demand changes quickly

Disadvantages

Disadvantage	Explanation
Hiring/Firing Costs	Recruitment, training, severance expenses
Morale Impact	Job insecurity reduces employee commitment
Quality Issues	New workers make more mistakes
Capacity Constraints	May not be able to hire skilled workers quickly enough
Supplier Strain	Variable production schedule disrupts suppliers

When to Use Chase Strategy

Situation	Appropriate?	Rationale
High inventory carrying cost	YES	Minimizes inventory investment
Skilled labor required	NO	Hard to hire/fire quickly
Strong labor unions	NO	Work rules may prevent flexibility
Service operations	YES	Can’t inventory services anyway
Perishable products	YES	Can’t build inventory
Stable demand	NO	Level strategy more efficient

Chase vs. Level Strategy

Aspect	Chase	Level
Production	Match demand each period	Constant rate
Workforce	Varies	Constant
Inventory	Minimal	Builds in low periods, depletes in high
Hiring/Firing	Frequent	Minimal
Best For	Services, perishables, high inventory cost	Manufacturing, stable demand

Concept

Term	Definition	Chase Strategy Application
Aggregate Planning	Planning production, workforce, inventory over 3-18 month horizon	Chase is one approach
Workforce Smoothing	Keeping workforce constant	Opposite of chase
Overtime/Idle Time	Adjusting hours instead of headcount	Alternative to hiring/firing
Part-time Workers	Flexible labor without full commitment	Enables chase without firing

Examples

From Slides:

• Chase Plan Calculation:

  • Period 1 demand: 500 units
  • Standard time: 0.64 hours/unit
  • Available hours per worker: 160 hours/month
  • Workers needed: (500 × 0.64) ÷ 160 = 2 workers
  • If currently have 18 workers: fire 16 workers

• Disadvantage Illustrated: “Constantly changing short term capacity” — the example shows firing 16 workers in one period, then presumably hiring in later periods as demand changes

Enriched Examples:

• Restaurant: Uses part-time servers to chase demand. Schedule 5 servers for Friday night, 2 for Tuesday lunch. Can’t inventory meals, so capacity must match demand.

• Tax Preparation Firm: Hires seasonal workers during tax season (January-April), lays off in May. Demand is highly seasonal; can’t “produce tax returns in advance.”

• Amazon Holiday Surge: Hires 100,000+ seasonal workers for Q4 holiday peak, then reduces workforce in January. Classic chase strategy for predictable seasonal demand.

• University Dining Hall: Adjusts staff based on class schedule. Full staff during semester, skeleton crew during breaks. Can’t prepare meals in advance for absent students.

Essay Angle

An essay might ask you to compare chase vs. level strategy for a given scenario or to analyze the appropriateness of chase for a specific operation. Framework: (1) define chase strategy and its characteristics, (2) analyze the operation’s characteristics (inventory costs, labor flexibility, demand patterns), (3) evaluate advantages and disadvantages in context, (4) recommend strategy with justification.

MCQ Watch-outs

• Chase = Match Demand: Chase strategy MATCHES capacity to demand each period. If a scenario describes constant production with inventory buildup, that’s LEVEL, not chase.
• Hiring/Firing: Chase involves CONSTANTLY CHANGING workforce. MCQs may describe a scenario with stable workforce — that’s NOT chase.
• Service Applicability: Services often MUST use chase (can’t inventory services). Manufacturing has a CHOICE between chase and level.

Memory Aid

CHASE = Change Hiring And Staffing to Execute

• Change workforce each period
• Hire/fire to match demand
• Aggregate planning approach
• Service operations use it
• Exactly what’s needed

Simple Version: “Chase the Demand” — Like a predator chasing prey, capacity follows demand wherever it goes

Sources

Chapter5.pptx [Slide 21-22]