The workforce size is varied as per to demand keeping the use of workers and inventory size constant. During months of low demand the workforce size is decrease and the extra workers are laid off similarly during months of high demand more workers are hired. The hiring and laying off costs are substantial in this plan. This workers morale is also low due to a sense of insecurity. The production of items is in tune with the demand requirements thus the inventory is almost negligible. Therefore the inventory cost is also negligible. During the months of heavy demand, overtime may be required month part of workers for which the company incurs overtime costs.
Advantages of chase plan
a.Anticipation inventory is not needed and investment in inventory is low.
b.Labor utilization is kept high. Disadvantage of chase plan
a.Expense of adjusting output rates and or workforce levels.
b. Alienation of workforce.