The chase and the level strategies represent two pure forms of aggregate production planning. In reality, one can expect organizations to utilize a combination of the available alternatives to devise a strategy for aggregate production planning. Mixed Strategy is therefore defined as one that employs a combination of the available alternatives for APP.
The following illustration explains this concept:
• Mixed Strategy 1: Here a certain number of workers at the beginning of the planning horizon, maintain a constant production rate and utilize inventory-based alternatives to match supply with demand.
• Mixed Strategy 2: Do not hire or lay off workers, adjust the production rate by varying the number of shifts, use inventory and subcontracting to match supply with demand.
• Mixed Strategy 3: Do not hire or lay off workers, use subcontracting during periods of high demand and build inventory during periods of low demand.
In all these examples, the strategy seeks to maintain level production during periods of low demand by building inventory and chase the demand by additional alternatives during periods of high demand. Thus, the focus shifts between level and chase. The cost structure of the alternatives will determine the total cost of each of these strategies.
In reality there can be numerous combinations of the APP alternatives. Each combination could form one mixed strategy with a certain cost of the plan.
Therefore, arriving at the best APP strategy involves enumerating the pure as well as the numerous mixed strategies and choosing the one with the least cost. Aggregate planning methods seek to fulfill this requirement.
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