A Firm Uses the Pure Chase Strategy of Aggregate Planning

question 6

Multiple Choice

A firm uses the pure chase strategy of aggregate planning. It produced 1000 units in the last period. Demand in the next period is estimated at 800, and demand over the next six periods (its aggregate planning horizon) is estimated to average 900 units. In following the chase strategy, the firm will

• A) add 100 units to inventory in the next period
• B) add 200 units to inventory in the next period
• C) hire workers to match the 100 unit difference
• D) lay off workers to match the 200 unit difference
• E) implement a lower price point to increase demand

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Definitions:

Professional Services

Services provided by individuals or firms possessing specialized knowledge and expertise, such as legal, accounting, or consulting services.

Manufacturing Business

A type of business that produces finished goods from raw materials by using various forms of machinery and human labor in a process known as manufacturing.

Factory Overhead

All the overhead costs related to the production process, except for the expenses on direct materials and direct labor.

Cost of Goods Sold

The direct costs attributed to the production of the goods sold by a company, including the cost of the materials and labor directly used to create the product.