Demand Management Study Guide (Level, Chase & Hybrid
Plans)|Rationales Graded A+ Latest Updated 2026
Demand-Based Options
includes two reactive options and one proactive option
Reactive option
the operations department uses inventories and back orders to react to demand fluctuations
Proactive option
marketing tries to shift the demand patterns to minimize demand fluctuations
Capacity-Based Options
changes output capacity to meet demand
finished goods inventory
used to absorb demand fluctuations; allows your company to develop a stable work
environment
Shifting demand
proactive marketing approach to leveling demand in which your company tries to change
consumer buying patterns by offering incentives
level aggregate plan
maintains a constant workforce and produces the same amount of product in each time period
of the plan
The level plan is often used with make-to-stock products such as...
stereos, kitchen appliances, and hardware
To calculate the number of employees needed...
divide the number of units needed per month by the monthly output per employee
chase aggregate plan
produces exactly what is needed to satisfy demand during each period
, This may be a better option when a company produces make-to-order products such as custom
cabinets, special-purpose equipment, one-of-a-kind items, or highly perishable products
chase aggregate plan
hybrid aggregate plan
uses a combination of options. With this plan, your company might maintain a stable workforce
supplemented by an inventory buildup and some overtime production to meet demand.
Sales and operations planning
integrates the medium-range functional plans developed by marketing, operations, engineering,
and finance
aggregate plan
Includes the budgeted levels of finished products, inventory, backlogs, workforce size, and
aggregate production rate needed to support the marketing plan
Also called production plan
Aggregate plan
Supports marketing plan
Aggregate plan
master production schedule
The anticipated production schedule for the company expressed in specific configurations,
quantities, and dates
point of departure
the percentage of normal capacity your company is currently operating at
Duration of the change
the length of time you expect to need the different level of capacity
Steps to Develop an Aggregate Plan
Step 1 Identify the type of aggregate plan
Step 2
Based on the aggregate plan, determine the aggregate production rate.
Step 3
Calculate the size of the workforce.