Explain the three basic production strategies used to complete the aggregate plan.

Chase strategy - Adjusts capacity to match demand patterns. Firms must hire and lay off workers to match its production rate to demand.Hiring, training, and termination costs are significant cost components in the chase production strategy.

Level strategy - Relies on a constant output rate and capacity while varying inventory and backlog levels to handle the fluctuating demand patterns. Firms keep their workforce levels constant and rely on fluctuating finished goods inventories and backlogs to meet demand. This strategy it is more suited for firms that require highly skilled labor.

Mixed strategy - Strives to maintain a stable workforce while using short-term means to manage short-term high demand. This strategy uses overtime and subcontracting to cope with the high demand periods. Some firms will schedule preventive maintenance or produce complementary products that require similar resources but different demand cyclesduring the off-peak demand periods.