Which cost increases most rapidly when a pure chase strategy is adopted?

Inventory holding costs are associated with storing unsold goods and are generally stable in a chase strategy, as the goal is to minimize inventory levels. Since the production aligns with demand, there is less need for extensive inventory, leading to relatively lower holding costs compared to the rapid fluctuations in labor costs.

While stock-out costs can increase due to potential mismatches between production and demand, a pure chase strategy primarily aims to prevent stock-outs by closely aligning production with demand. Thus, stock-out costs do not escalate as quickly as hiring and lay-off costs, which are directly impacted by workforce adjustments.

Overtime premium costs may increase if demand spikes unexpectedly, but they are not as directly influenced by the hiring and lay-off practices of a pure chase strategy. Overtime can be managed through more stable workforce planning, making it less susceptible to rapid increases than hiring and lay-off costs.