Victoria,

Excellent!

To use a level production plan (inventory goes up and down, yet production remains stable), you must produce a storable product (Bozarth & Handfield, 2019). For example, if your plant produces concrete blocks, you can keep production level and allow your inventory to rise and fall to meet demand. If you are an attorney, a CPA, or a plumber, you might can work ahead of some projects or cases, but you cannot store your product to accommodate rising or falling demand, so a level production strategy is not feasible.

To use a chase production plan (inventory remains stable and low, yet production goes up and down based on demand), you are using your production plant to "chase" customer demand. If your product is swimwear and you serve only retail outlets in the southern United States, your demand might be 1,000,000 units in the early spring, yet fall off to almost nothing in the fall and winter. Are you going to shut your plant down, lay off all the workers, and then rehire everyone once demand picks back up (a chase plan)? Or, would you be better off producing, let's say 125,000 units a month, and allowing your inventory to build in preparation for the early spring high demand (a level production plan)?