The Warehouse Design and Control Problem

Based on Rouwenhorst et. al.

EJOR, Vol. 122

pgs 515-533, 2000

Topics already covered

• The roles of the Warehouse in contemporary distribution networks– Buffer

– Consolidation

– Value Adding Processing

Topics already covered (cont.)

• Warehouses processes and the associated material flow

Receiving Shipping

Reserve Storageand

Pallet Picking

CasePicking

BrokenCase

Picking

Accumulation, Sortation & Packing

Cross-docking

Directputawayto reserve

Directputawayto primary

Replenishment Replenishment

Topics already covered (cont.)

• Major warehouse equipment, its functionality, and justification– Containers & Unitizing Equipment

– Storage and Retrieval Equipment• Unit Load

• Small Load

– Conveyors

– Warehouse docks and dock-related equipment

– Automatic Identification and Communication Equipment

Major decisions underlying the Warehouse deployment and operations

• Configuration issues– Organization of the material flow

• Unit Loads

• Establishment of a forward area– items to be included in the forward area

– sizing of the forward area

• zoning, batching, sortation and consolidation schemes

– Equipment selection and its sizing• storage modes

• order picking and material handling equipment

• Warehouse management system and automatic identification and communication equipment

– Layout

– Personnel skills and sizing

Major decisions underlying the Warehouse deployment and operations

• Policies– Receiving policies

• Assigning trucks to docks

– Storage policies• Assigning received material to storage locations

– Replenishment policies– Order processing policies

• order batching policies

• zoning policies

• picker routing

– Sortation and consolidation policies– Shipping policies

Decision / Performance Criteria

Responsiveness

Quality

CostInvestment +OperationalSpace/Equipment/Labor

Product qualityOrder accuracy

Order flow timethroughputfill ratevolume flexibility/storage capacitymix flexibility

=> Multi-criteria Optimization Problem!

Warehouse types/missions and Competitive Strategies

• Factory warehouse: Interfaces production with wholesalers– small number of large orders daily– advance info about order composition

=> focus on cost and order accuracy

(responsiveness depends heavily on production schedules)

• Retail Distribution warehouse: Serves a number of captive retail units– advance info about order composition– carton and item picking from a forward area– more orders per shift than consolidation/shipping lanes

=> focus on cost, accuracy and fill rate

(responsiveness depends heavily on truck routing schedules)

Remark: If the retail units are not captive, then responsiveness becomes a crucial issue!

Warehouse types/missions and Competitive Strategies

• Catalog Retailer: A warehouse filling orders from catalog sales– a large number of small (frequently single-line) orders– item and, sometimes, carton picking– daily composition of orders usually unknown– only statistical information available

=> focus on cost and response time

• Support of Manufacturing operations: A stock room providing raw material and/or work-in-process to manufacturing operations– many small orders– only statistical information available about order composition– stringent time requirements (e.g., response in 30 min)

=> focus on response time but also accuracy and cost

Addressing the problem complexity:Hierarchical Decomposition

• Strategic-level decisions: they have the longer-lasting impact on the operation of the warehouse, and involve major investment– process flow design

– equipment selection

• Tactical-level decisions: medium-term decisions which might still involve significant investment– sizing of the facility areas and its equipment

– layout

– resolution of organizational issues like the storage and replenishment schemes, and batch sizing

• Operational-level decisions: Decisions and policies related to the real-time operation of the facility– assignment and control problems of people and equipment

Strategic-Level Concerns (Rouwenhorst et.al.)

Receiving Storing Orderpicking Shipping

Resources

Processes

OrganizationSeparatereserve area?

Batching?

Differenttypes ofstorage?

Types ofstorage

Storageunit

Types ofsorting eq.

Receiving Storing Orderpicking Shipping

Resources

Processes

Organization

Tactical-level concerns(Rouwenhorst et. al.)

Forward andreserve area

Storageconcept

Pick zones

Batch size

Numberof docks

Tech. zones Numberof docks

LayoutStoring and Picking eq. capacity

Peripheral eq. and workforce capacity

Operational-level concerns(Rouwenhorst et. al.)

Receiving Storing Orderpicking Shipping

Resources

Processes

Organization DockAssignment

Replenish-ment Policy

Storageplan

DockAssignment

Batchformation

Picking taskAssignment

Routing

Dwell point

Chute Assignment

Workforce Assignment

General Remarks• The decomposition is ad-hoc: no theoretical justification

• Top-down approach: Higher-level decisions constitute constraints for lower-level decision making: – However, they must be revised if the lower-level problems become infeasible

• Most existing quantitative analysis addresses tactical and operational issues

• Strategic level issues hard to formally model and analyze due to– underlying problem complexity– elusive / intangible nature of some of the considered criteria (e.g., flexibility).– Typically, one seeks to narrow down the design alternatives to a few

configurations that tend to minimize (annualized investment and operational) costs, while meeting some technical and performance-related constraints

Course roadmap• Familiarize ourselves with the formal theory and key analytical results

addressing some of the problems identified in the above taxonomy.– Storage configuration and storage policies– the forward/reserve problem– order-picking: batching, zoning, and routing– Pallet-building– Warehouse layout– Configuring and controlling automated storage and retrieval equipment– Cross-docking

• Address the synthesis/design problem through project assignments• Rouwenhorst et. al.: a good starting point for tracing literature on a

particular problem.

But first of all...

• Warehouse profiling:Retrieving and evaluating the problem data.

• In general,– project inception– data acquisition– functional specification– technical specification– selection of means and equipment– layout– selection of planning and control policies