chase demand strategy

Business strategy that involves matching supply with demand, as demand varies. The strategy is suitable for the end suppliers of a product or service who can closely match supply and demand. Chase demand strategy would also be suitable for a computer manufacturer and retailer that builds computers to order, such as Dell. A problem associated with this strategy is that in periods of low demand the company will be working below its maximum capacity and may have to make staff redundant.

Methods of chasing demand include: employing staff on overtime when necessary; employing flexible and casual labour; buying in components that are usually made in-house; and outsourcing elements of the production process. This strategy is in contrast to a level output strategy, where output is at the rate of the average demand.