Question

if a company currently employs the chase strategy and the cost of training increase dramatically. How might this change the company's aggregate planning strategy

Answer 1

The chase strategy should be used when the cost of carrying inventory is very high and the costs to change levels of machine and labor capacity are low. Industries with these characteristics include aircraft and other high dollar products and producers of highly perishable products.

As training costs increase, it becomes more expensive to vary the level of workforce, perhaps to the point of making a chase strategy cost-prohibitive. If a chase strategy is taken off the table, then the aggregate planner should familiarize himself with a level strategy, time flexibility strategy, or some happy combination of the two. In a chase strategy a comany continuously changes its production to meet demand.This means that it will have to change resources as new people will be hired and trained and some non performers will be fired. All this will increase cost of training.