2013.Jun

A Study on the Storage Assignment of Distribution Center -The case of Footwear

and Apparel Distribution Center

2013.Jun

Advisor: Chi-Kong Huang,

Ph.D.

Graduate: Siao-Rou Chiang

2

Contents

Introduction

Literature Review

Research Method

Example Verification

Expect Conclusions

3

Introduction

Background and Motivation

Research Scope

Research Purposes

Research Process

4

Background And Motivation

• Distribution Center are the basic warehouse functions – Receiving– Storage– Order picking– Shipping

Warehouse Design

Overall Structur

e

Sizing and Dimensionin

g

EquipmentSelection

Operation Strategy

Warehouse Operation

Receiving Storage Order

picking

Shipping

Performance

Evaluation

Department Layout

5

Background And Motivation

• Storage How Much Quantity ?

How Frequently ?

Where Should Stored ?

• Chan et al.(2010) indicates pickers have to travel long distance and spend more time on picking

Improve efficiency Reduce the moving

distance

50%

20%

15%

10%

5%

TravelSearchPickSetupOther

6

Research Scope In this study, a case study is proposed• Case ： LF Logistics of P brand supplier• SKUs Classify ： Apparel 、 Footwear and Accessory• Characteristic ： Multi-SKUs with low quantity, Periodicity, Fashion-like Products.• Historical Data ： Inbound and Outbound Date during 2012 – Q3,Q4

Research

Inbound,Outbound

Data

SKUs Characteristic Existing

WarehouseEnvironment

7

Research Purposes

A case study of an integrated Storage Assignment Plan

• Assignment rule Make the suit classification and assignment of inventory

• Storage policy Discuss the Inventory characteristics of the case study

• Storage Layout Consider of a variety of different storage layouts to reduce the order picking

distance

8

Research Purposes

Research

Assignment

rule

Storage

Layout

Class-

based

Storage

9

Research Process

Find theQuestion

LiteratureReview

HistoricalData,

AnalyzeSKUs

ConstructionMethods

IntegratedStorage

AssignmentPlan

Reducethe

OrderPicking

Distance

10

Literature Review

Warehouse Operation

Storage Assignment Plan

A Case Study

11

Literature Review-Warehouse operation

Receiving Storage

Storage assignment

OrderPicking

Shipping

• Pan(2011) indicate the KEY to effective of a Storage Assignment Match the types of Warehouse Storage Assignment

Different Stock Keeping Units (SKUs)

Storage space

Retrieval time

12

Literature Review-Storage Assignment Plan

Storage Assignment

Storage PolicyAssignment Rule Storage Layout

Closest open location

Turnover base location

Correlation

EIQ Analyze

Cube-Per-Order

Dedicated Storage

Random Storage

Class-based

StorageRandom within

class

Shared Storage

Diagonal LayoutWithin-aisle LayoutAcross-aisle LayoutPerimeter Layout

Complex-aisle

Layout

13

Literature Review-Storage Assignment Plan

Type Author Year Result MethodAssignment

RuleYu-Shan Chang 2002

Using EIQ analyze, design a storage assignment with order picking for

distribution center a integration plan.

EIQ analysis indicators, apply a way of picking and assign way.

Assignment Rule

Chuang et al. 2012

Construct item-associated model, which can effectively improve order

picking efficiency.

Construct clustering and assignment model, compare

with EIQ and Random storage policy.

StoragePolicy

Eldemiret al. 2004

To discuss operating cycle and storage space, the simulation

results, class-based storage suitable for short-cycle products

Compare dedicated storage, random storage and class-based storage in the same environment performance

StoragePolicy

Chanet al. 2011

ABC class-based storage assignment policy can improve the

performance of picking in total order retrieval time.

Using EIQ analyze and COI, AS/RS storage space.

Storage Layout

Petersenet al. 1999

Route policy and Storage Strategies order picking efficiency, storage

layout of the four categories classified storage

Volume class-based storage

Storage Layout

Ashayeriet al. 2002

Proposed three layout of geometry class-based storage, the computing system operating time, the shortest time results in order to combine the

aisle and cross-aisle minimum order picking.

Geometry class-based storage

14

Literature Review- A Case Study

• P-Brand Supplier

• Operation： Inbound 、 Storage 、 Order Picking 、 Return By Carton- Pallet Rack (Two Pallets Type) By Piece - Light Duty Rack

Inbound Outbound

Outbound

Pallet Rack

Light Duty Rack

15

Research Method

Problem Definition

Research Method Structure

Storage Assignment Plan

16

Research Method-Problem Definition

• Storage management operation → Empirical rule

Supervisor

New SKUs

Return

Empirical rule Empty storage

spaces

Random Storage

Operator

17

Research Method-Problem Definition

Layout

I/O point known,

lower left corner

Existing storage

environment

6000 light duty ranks

SKUs

Total SKUs：5,872Total

Quantity：377,223

Apparel3,246

Footwear1,646

Accessories

980

Data

InboundDuring 2012

OutboundAt 2012-Q4

DistanceSingle order

picking

Picking from one

depot

Nearest Neighbor Algorithm

18

Research Method-Research Method Structure

P brand

Footwear AccessoriesApparel

Men Women Kinds

LifestyleMotor sport Golf

SportsBasic

• Generalizing SKUs Hierarchies of SKUs be used for arranging SKUs Association rule mining is conducted among items at the lowest level

19

Research Method-Research Method Structure

With ABC class-based Storage Policy

Start

Environmental parameters

Historical data of SKUs

Assignment

Rule

Storage Assignment Program

R

t

tDMinimize1

t ： location ； Dt ： the distance from location to I/O point

Correlation Inventory ratio EIQ

Analyze

The first phase

Diagonal Within-

aisle

Across-

aisle

Complex-

aisle

The second phase

Class-based storage/

Storage layout

1

2

20

Research Method-Storage Assignment Plan• Assignment Rule – Correlation

The order-item association rule, item-index between items i and j as follows.

Items are assigned into groups

P(i∩j) is the number of orders containing items i and j)()(

)(jpip

jipSij

N

a

K

bababXSMaximize

1 1

NbaxN

bab ,...,2,1, 1

1

1

N

bb KY

N..., ,1 ,0, 1,0 baYb

N ..., ,1 ,0, 1,0 baX ab

Subject to ：

High Correlation are in the same Group

Item can be clustered in one group only

Limits that the number of clusters

Binary decision variables, Xab, item a association to cluster b, Yb point of cluster,There was 1, and 0 otherwise

21

Research Method-Storage Assignment Plan• Assignment Rule - Inventory Ratio

Cycle of product ： one season

• With ABC class

• Differences between the seasons Seasonal Off-season

Select existing SKUs

Inbound of quantity, history data

Existing SKUs, Inventory data

The calculated SKUs Inventory Ratio,

(Existing inventory / Inbound of

quantity)

Type ： AMore than 50%

Type ： B50%-10%

Type ： CLess than 10%

constructed classification assign rule

22

Research Method-Storage Assignment Plan• Assignment Rule - EIQ Analyze

• Consider both the Quantity and Frequency

• With ABC [Chan, 2011] A ： 60% of the total index of SKUs B ： 30% of the total index of SKUs C ： 10% of the total index of SKUs

Historical order data

Construct EIQ analyze

Item Frequency (IK) Analyze

Item Quantity(IQ)Analyze IQ*IK Analyze

Class A SKUs Class B SKUs Class C SKUs

23

Research Method-Storage Assignment Plan

• With ABC Class-based storage / Storage layout

Diagonal Within-

aisle

Across-

aisleComplex-

aisle

24

Example Verification

Example Description

Storage Assignment Plan Program 2



Analysis and Comparison

25

Example Verification-Description

• Simplify Data and Layout in case Single order picking Nearest Neighbor Algorithm

• Storage Assignment Plan program The First Phase ： 3 of Assignment Rule The Second Phase ： 4 of Storage

layout

Assignment RuleStorage layout

Correlation Inventory Ratio EIQ Analyze

Diagonal Layout Program1 Program5 Program9

Within-aisle Layout Program2 Program6 Program10

Across-aisle Layout Program3 Program7 Program11

Complex-aisle Layout program4 Program8 Program12

Verify the feasibility of the programs

26

Example Verification-Description

Y

I/O

(0,1)

(0,2)

(0,3)

(0,5)

(0,4)

(1,1)

(1,2)

(1,3)

(1,5)

(1,4)

(2,1)

(2,2)

(2,3)

(2,5)

(2,4)

(1,0) (2,0)X

1I/O

3

2

1

4

3

2

5

4

7

6

5

4

3

2

6

5

　 Item 　Entry A B C D E F G H I J K L M N O P Q Total

1 0 0 0 0 0 1 0 0 0 0 0 0 0 1 1 0 0 3

2 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 0 0 3

3 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 1 2

4 1 0 0 0 0 0 0 0 1 0 0 0 0 1 0 0 0 3

5 1 0 0 1 0 1 0 0 0 0 0 0 0 0 0 0 0 3

6 1 0 0 1 0 1 0 0 0 0 0 0 0 0 1 0 0 4

7 1 1 1 1 0 0 0 1 0 1 1 1 0 0 0 0 0 8

8 1 0 0 1 1 1 0 0 0 0 0 0 0 0 0 0 0 4

9 0 0 0 1 1 1 1 0 0 0 0 0 0 0 0 0 0 4

10 0 0 0 0 0 1 1 1 0 0 0 0 1 0 1 1 0 6

11 1 0 0 0 1 0 0 0 0 0 0 0 0 0 1 0 0 3

12 0 0 0 0 0 1 0 0 1 0 0 0 0 0 0 0 0 2

Total 6 1 2 5 3 7 2 2 2 1 1 1 2 3 5 1 1 45

Based on Rectilinear Distance

12 orders in Oct.

27

Example Verification-Program 2• Program 2

Correlation * Within-aisle Layout

J

C

M

O

AI/O

Q

L

P

I

G

E

K

B

H

N

D

FA

B

CItem A B C D E F G H I J K L M N O P Q

A - 0.08 0.08 0.33 0.17 0.25 0 0.08 0.08 0.08 0.08 0.08 0 0.08 0.17 0 0

B 0.08 - 0.08 0.08 0 0 0 0.08 0 0.08 0.08 0.08 0 0 0 0 0

C 0.08 0.08 - 0.08 0 0 0 0.08 0 0.08 0.08 0.08 0 0 0 0 0.08

D 0.33 0.08 0.08 - 0.17 0.33 0.08 0.08 0 0.08 0.08 0.08 0 0 0.08 0 0

E 0.17 0 0 0.17 - 0.17 0.08 0 0 0 0 0 0 0 0.08 0 0

F 0.25 0 0 0.33 0.17 - 0.17 0.08 0.08 0 0 0 0.08 0.08 0.17 0.08 0

G 0 0 0 0.08 0.08 0.17 - 0.08 0 0 0 0 0.08 0 0.08 0.08 0

H 0.08 0.08 0.08 0.08 0 0.08 0.08 - 0 0.08 0.08 0.08 0.08 0 0.08 0.08 0

I 0.08 0 0 0 0 0.08 0 0 - 0 0 0 0 0.08 0 0 0

J 0.08 0.08 0.08 0.08 0 0 0 0.08 0 - 0.08 0.08 0 0 0 0 0

K 0.08 0.08 0.08 0.08 0 0 0 0.08 0 0.08 - 0.08 0 0 0 0 0

L 0.08 0.08 0.08 0.08 0 0 0 0.08 0 0.08 0.08 - 0 0 0 0 0

M 0 0 0 0 0 0.08 0.08 0.08 0 0 0 0 - 0.08 0.17 0.08 0

N 0.08 0 0 0 0 0.08 0 0 0.08 0 0 0 0.08 - 0.17 0 0

O 0.17 0 0 0.08 0.08 0.17 0.08 0.08 0 0 0 0 0.17 0.17 - 0.08 0

P 0 0 0 0 0 0.08 0.08 0.08 0 0 0 0 0.08 0 0.08 - 0

Q 0 0 0.08 0 0 0 0 0 0 0 0 0 0 0 0 0 -

The first phas

e

The second phase

Program 2

28

Example Verification- Program 6• Program 6

Inventory Ratio * Within-aisle Layout

ItemA B C D E F G H I

Inbound 480 242 65 935 1,515 390 645 611 652

Inventory 478 11 15 146 79 388 42 604 14

Ratio* 99.6% 4.5% 2.3% 15.6% 5.2% 99.5% 6.5% 98.8% 2.1%

Sequence 2 12 16 7 11 3 10 4 17

ItemJ K L M N O P Q

Inbound 857 422 313 738 1498 720 373 449

Inventory 845 15 1 723 14 87 372 13

Ratio* 98.6% 3.5% 3.2% 98.0% 6.9% 12. 8% 99.7% 2.9%

Sequence 5 13 14 6 9 8 1 15

L

B

N

D

PI/O

I

Q

E

G

J

H

C

K

O

M

F

AA

B

C

The first phas

e

The second phase

Program 6

29

Example Verification- Program 10• Program 10

EIQ Analyze * Within-aisle Layout

Item IQIQ(%)

(1)IK

IK(%)(2)

IQ*IK(%)(1)*(2)*10

Sequence

A 792 25.30% 6 13.3% 33.7% 1

B 115 3.67% 1 2.2% 0.8% 7

C 736 23.51% 2 4.4% 10.5% 5

D 535 17.09% 5 11.1% 19.% 2

E 112 3.58% 3 6.7% 2.4% 6

F 215 6.87% 7 15.6% 10.7% 4

G 54 1.73% 2 4.4% 0.8% 8

H 31 0.99% 2 4.4% 0.4% 11

I 28 0.89% 2 4.4% 0.4% 12

J 24 0.77% 1 2.2% 0.2% 15

K 21 0.67% 1 2.2% 0.1% 16

L 10 0.32% 1 2.2% 0.1% 17

M 38 1.21% 2 4.4% 0.5% 10

N 28 0.89% 3 6.7% 0.6% 9

O 314 10.03% 5 11.1% 11.1% 3

P 35 1.12% 1 2.2% 0.2% 14

Q 42 1.34% 1 2.2% 0.3% 13

Total 3,130 100% 45 100% 100% 　

P

I

G

E

D

I/O

L

J

H

N

C

O

K

Q

M

B

F

AA

B

C

The first phas

e

The second phase

Program 10

30

Example Verification-Analysis and Comparison

• Existing state as Random Storage Random vs. Program 2 vs. Program 6 vs. Program 10 With 12 orders, 17 items

Random Program 2 Program 6 Program 10

Distance 142 98 126 114

Improve 0 44 16 28

Diff(%) With Random

0% 31% 11% 20%

The program is feasible to reduce picking distance

Diff(%) ： (Program-Random)/(Random)

31

Expect Conclusions

• Use of all of the existing warehouse SKUs• Data range of 2012-Q4 to 2013-Q2• Using simulation of method

1 月 2 月 3 月 4 月 5 月 6 月

Data collection, coding

Data testing and analysis

Writing and integration

32

Thank you!

At LF Logistics, we never lose sight of Our Customers’

Business

LF Logistics, Your Best Business Partner

2013.Jun

Documents

Transcript of 2013.Jun