The management decisions are classified into three levels or

categories:

1. Strategic Production Planning:

Strategic planning involves deciding and developing strategic plans to
achieve strategic objectives (or goals). Top management typically
develops the strategic plans. These decisions or plans are normally
long term decisions, which are having implications for the next five
years and above. Lot of risk and uncertainty is involved in long term or
strategic level planning. Strategic planning needs a through scanning
and analysis of external environment to seek information.

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The strategic operations planning decisions include:

1. Technology decisions: Choice of appropriate technology,
equipment’s, process choice and degree of automation.

2. Capacity decisions: Amount, timing and type.

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3. Facilities decisions: Size, location and specialisations

4. Vertical integration: Direction, extent and balance

The strategic level production planning is concerned with decisions,

which are having implications for the next five to ten years. These
decisions are critical to the success and better performance of the
organization. These decisions influence the competitive positions of
the organisation and help to position the operations strategy of the
organisation.
Characteristics of Strategic Production/Operational
Planning:
1. Strategic level production planning helps to achieve the goals in the
best possible way.

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2. It helps to achieve the competitive advantages and to develop core

competence.

3. It helps to develop strengths and eliminate weaknesses to en-cash

the available opportunities.

4. It gives direction to growth and development of business.

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5. Strategic level planning lays foundations for tactical goals and

operational goals.

6. These planning decisions are critical to success or failure of the

organisation.

7. Strategic decisions are to be taken with less information and also in

the environment of uncertainty and risk.

8. All the strategic level planning is always associated with risk and it
is used in some futuristic assumption.

2. Tactical Production Plan:

Tactical planning is done at middle management level, which mainly
involves the resource acquisitions and utilisations to achieve the
organisational goals. Tactical plans cover shorter time frames and are
associated with less uncertainty and hence lower risk as compared to
strategic planning.

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Tactical level production planning is a medium term planning. (A

planning period ranging between 2 to 3 years). Tactical planning is
mainly concerned with deciding specifically how the resources of the
organisation will be utilised to achieve the organisational strategic
goals. Tactical planning involves less uncertainty and hence lower risk
compared to strategic planning. Mainly the planning requires
internally generated data.

Tactical planning decisions include:

1. Establishing parameters for measuring operational efficiency and
productivity.

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2. Making plans to improve utilisation of existing resources.

3. Prepare equipment and manpower planning.

4. Planning for modernization of the facilitates and automation.

5. Specific technology and tools to enhance production efficiency or

productivity.
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6. Prepares work plans for process redesign, methods improvement

and job design.

7. Make or buy decision.

8. Projections regarding skill requirements for future work assignment

and prepare the skill development plans.

9. Planning for medium term maintenance (preventive and condition

monitoring) to enhance the availability of production facilities.

Characteristics of Tactical Production Plan:

1. Planning for the medium term ranging between 2–3 years.

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2. Focus is on fixing performance parameters and generating data to

compare actual and planned performance and taking steps to reduce
gap between planned and actual.

3. Prepares plans for effective utilisation of existing resources.

4. Plans to enhance equipment availability and overall productivity of

the production function.

3. Operational Level Production Planning:

The operational planning decisions are taken at the bottom level of
management and these are routine decisions. These plans are
prepared to establish actions necessary for achieving operational
goals. These cover shorter time frame i.e. within a year. No or very less
uncertainty in these plans and information needed is internal. They
are stated in definite quantitative terms and can be spelt out in terms
of time and targets. 

The lower level management develops operational plans and the

planning horizon is (maximum) one year. These plans establish
actions that are necessary to achieve operational goals. These plans are
deterministic in the sense that uncertainty is very low. The plans are
expressed in terms of actions, which can be quantified.

For example, production plan is an operational level

planning gives the details like:
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1. What is the job

2. On which machine/machines it is to be processed (sequence of

operations)

3. Who should this job – operator details

4. Starting and finish times of each job in each of the workstation or

machines or facilities

5. Quality specifications and inspection and test details.

Thus, the operational production plan gives all the details regarding
the processing of the product from raw material stage to finished
goods ready for dispatch after quality check and performance testing.
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Characteristics of Operational Level Production Plans:

1. Plans are definite, and action oriented.

2. Plans are expressed in terms of parameters, which can be

quantified.

3. Plans give the detailed instructions regarding.

a. What is to be done?

b. Who should do?

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c. When and where?

4. The plans are quantified and are expressed in measurable units and
hence comparison between planned and actual is easy.

5. It helps to monitor the progress of the plan and take corrective

action if needed to achieve the target.