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PRODUCTION PLANNING STRATEGIES

To ensure the production process finishes in the right time, for the right price, and meets the consumers’ expectations in terms of quantity.

The main strategies used in production planning are:

Each strategy has benefits and drawbacks for your business

Chase Strategy

Level Production:

Mixed Strategy

Refers to the notion that you are chasing the demand set by the market. Production is set to match demand and doesn't carry any leftover products. This is a lean production strategy, saving on costs until the demand – the order – is placed. Inventory costs are low, and the cost of goods for products sold is kept to a minimum and for a shorter length of time.

or wIndustries where perishables are an issue or with a company that doesn't have a lot of extra cash on hand and doesn't want the added risks of loss, theft or unsold products. The production schedule is based on orders and immediate demand.ith a company that doesn't have a lot of extra cash on hand and doesn't want the added risks of loss, theft or unsold products. The production schedule is based on orders and immediate demand.

Is common in

With the level strategy, production remains at a constant level in spite of demand variations,means that a company will produce at a constant rate regardless of the demand level. Finished goods inventory levels will grow during low demand periods and decrease during high demand periods.

Is common in

Industries where demand is cyclical and production capabilities are limited or capped. For example, assume a manufacturing plant can only produce 10,000 calculators per month. The demand for calculators changes based on consumer cycles that peak during the start of the school year and tax season.

Combination of Level Production and Chase Demand strategies

Under mixed strategy, both inventory and workforce levels are allowed to change during the planning horizon.

This will be a good strategy if the costs of maintaining inventory and changing workforce level are relatively high