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Chase strategy refers to the concept that you are chasing the demand set by the market. Production is set to match demand and does not 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.
The chase strategy is used in the industries that must contend with perishables or with a company that does not have a lot of extra cash on hand to handle the added risks of unsold products. The production schedule is based on orders and immediate demand.
By varying production or services to meet demand, the lean approach of inventory management has lower inventory levels and reduced labor cost.
For example, an airline call center has varying demand-higher calls during summer months and major holidays. Inaccurate forecasts can cause havoc concerning staff capacity and scheduling decisions. In some situations, equipment capacity may not be adequate during periods of peak demand.
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