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PRODUCTION PLANNING HIERARCHY
Assistant Professor Dr. Mahmoud Abbas Mahmoud
Industrial Engineering Branch
Department of Production Engineering and Metallurgy
University of Technology
Baghdad - Iraq
dr.mahmoudalnaimi@uotechnology.edu.iq
dr.mahmoudalnaimi@yahoo.com
2015 - 2016
6201-5201Production Planning and Control Dr. Mahmoud Abbas Mahmoud
1
4- PRODUCTION PLANNING HIERARCHY
Typically, the manufacturing organizations have three categories of
managerial planning activities whose names "strategic", "tactical", and
"operational" production planning. Strategic planning is clearly of "long-
range" scope planning decisions. It is a responsibility of top management
so it is called "business planning". Tactical planning is a "medium-
range" activity involving middle managements. Finally operational
planning, which involves "short-range" actions, and it is normally
executed by lower levels of management (factory operations managers).
Long-range (business plans) are necessary to develop facilities and
equipment, major suppliers, and production processes and become
constraints on the medium-range plan. Medium-range is "aggregate
plans" concerning with employment, aggregate inventory, utilities,
facility modifications, and material-supply contracts. These aggregate
plans impose constraints on the short-range production plans that follow.
So short-range is "Master Production Schedules" (MPS) for producing
finished goods or end items, which are used to derive production planning
and control systems. These systems develop short-range production
schedules of parts and assemblies, schedules of purchased materials,
shop-floor schedules, and workforce schedules. Figure (1) gives an
illustration of the planning activities.
6201-5201Production Planning and Control Dr. Mahmoud Abbas Mahmoud
2
Figure (1) Production Planning Hierarchy
Business Planning
Aggregate
Production
Planning
Master Production
Scheduling
Production
Planning and
Control Systems
Planning Horizon
Description
Long-Range
(1-5 Years Horizon)
Medium-Range
(3-12 Months Horizon)
Short-Range
(1-90 Days Horizon)
Top management make long-range plans
for (1)facilitates- plant locations, layouts,
size, and capacities; (2) major supplier
plans and amount of vertical
integrations; (3) processing plans- new
production technology, new production
processes, new system of automations.
Factory operations managers make
plans for (1) production schedules of
parts and assemblies to be
manufactured; (2) schedules of
purchased materials; (3) shop floor
schedules–machine changeovers,
batch movements; (4) workforce
Middle management make plans for (1)
employment–layoffs, hiring, recalls,
vacations, overtime, part-time
employees; (2) inventories; (3) utilities;
(4) facility modifications; (5) material-
supply contractors.
Phase I
Phase II

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Production planning hierarchy

  • 1. PRODUCTION PLANNING HIERARCHY Assistant Professor Dr. Mahmoud Abbas Mahmoud Industrial Engineering Branch Department of Production Engineering and Metallurgy University of Technology Baghdad - Iraq dr.mahmoudalnaimi@uotechnology.edu.iq dr.mahmoudalnaimi@yahoo.com 2015 - 2016
  • 2. 6201-5201Production Planning and Control Dr. Mahmoud Abbas Mahmoud 1 4- PRODUCTION PLANNING HIERARCHY Typically, the manufacturing organizations have three categories of managerial planning activities whose names "strategic", "tactical", and "operational" production planning. Strategic planning is clearly of "long- range" scope planning decisions. It is a responsibility of top management so it is called "business planning". Tactical planning is a "medium- range" activity involving middle managements. Finally operational planning, which involves "short-range" actions, and it is normally executed by lower levels of management (factory operations managers). Long-range (business plans) are necessary to develop facilities and equipment, major suppliers, and production processes and become constraints on the medium-range plan. Medium-range is "aggregate plans" concerning with employment, aggregate inventory, utilities, facility modifications, and material-supply contracts. These aggregate plans impose constraints on the short-range production plans that follow. So short-range is "Master Production Schedules" (MPS) for producing finished goods or end items, which are used to derive production planning and control systems. These systems develop short-range production schedules of parts and assemblies, schedules of purchased materials, shop-floor schedules, and workforce schedules. Figure (1) gives an illustration of the planning activities.
  • 3. 6201-5201Production Planning and Control Dr. Mahmoud Abbas Mahmoud 2 Figure (1) Production Planning Hierarchy Business Planning Aggregate Production Planning Master Production Scheduling Production Planning and Control Systems Planning Horizon Description Long-Range (1-5 Years Horizon) Medium-Range (3-12 Months Horizon) Short-Range (1-90 Days Horizon) Top management make long-range plans for (1)facilitates- plant locations, layouts, size, and capacities; (2) major supplier plans and amount of vertical integrations; (3) processing plans- new production technology, new production processes, new system of automations. Factory operations managers make plans for (1) production schedules of parts and assemblies to be manufactured; (2) schedules of purchased materials; (3) shop floor schedules–machine changeovers, batch movements; (4) workforce Middle management make plans for (1) employment–layoffs, hiring, recalls, vacations, overtime, part-time employees; (2) inventories; (3) utilities; (4) facility modifications; (5) material- supply contractors. Phase I Phase II