The Warehouse Design and Control Problem Based on

The Warehouse Design and Control Problem Based on • Rouwenhorst et. al. , EJOR, Vol. 122, pgs 515 -533, 2000 • Yoon, C. S. and Sharp, G. , IIE Trans. , Vol. 28, pgs 379389, 1996

Topics already covered • The roles of the Warehouse in contemporary distribution networks – Buffer – Consolidation – Value Adding Processing • Warehouse classification based on Customer types – – Factory Warehouse Retail Distribution Warehouse Catalog Retailer Support to Manufacturing operations

Topics already covered (cont. ) • Warehouses processes and the associated material flow Replenishment Case Picking Reserve Storage and Pallet Picking Replenishment Broken Case Picking Accumulation, Sortation & Packing Direct putaway to reserve Direct putaway to primary Receiving Shipping Cross-docking

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, Time Windows and Pick Waves – Equipment selection and its sizing • storage modes • order picking and material handling equipment • Warehouse management system and automatic identification and communication equipment – Layout: Allocation of Storage Capacity – 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 Order flow time throughput fill rate volume flexibility/storage capacity mix flexibility Cost Investment + Operational Space/Equipment/Labor Product quality Order accuracy Quality => 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

Yoon & Sharp’s design procedure MANAGERIAL CONSIDERATIONS PRODUCT DATA ANALYSIS ORDER DATA ANALYSIS INPUT STAGE SPECIFICATION OF ORDER PICK SYSTEM STRUCTURE SPECIFICATION OF EQUIPMENT SPECIFICATION OP. STRATEGIES MATERIAL FLOW SUBSYSTEM I SELECTION STAGE INFORMATION FLOW SUBSYSTEM II SUBSYSTEM N SUBSYSTEM RECONCILIATION EVALUATION & SELECTION OVERALL PERFORMANCE ANALYSIS EVALUATION STAGE

Defining Department and Subsystem structure Department B Department A Subsystem A 1 Transport Equipment 1 Subsystem B 1 Subsystem A 2 Transport Equipment 2 Subsystem B 2 Subsystem An Transport Equipment k Subsystem Bn Storage structure (e. g. , Gravity Flow Rack) Transport Equipment (e. g. , forklift) Transfer Device Storage Equipment Retrieval Equipment (e. g. , pick to light) Transfer Device Transport Equipment (e. g. , Belt Conveyor)

Determining the basic system structure Product data: • Activity level • requested quantities • product properties • vendor types Order data: • number of line items • number of items • cubic volume • shipping priorities • product correlation Managerial requirements / company strategy • Definition of major functional areas / departments • Definition of departmental subsystems • Storage and material handling modes • Operational policies • storage policies • replenishment policies • order picking policies • batching • sorting • zoning • routing • receiving & shipping policies

Warehouse Activity Profiling (c. f. Bartholdi & Hackman, Chpt. 10) • The careful measurement and statistical analysis of the warehouse activity. • The process of understanding the customer orders that drive the system • Sifting through historical data for opportunities and insights that might confer advantage. Summary statistics SKU data Order data Location data WAP Distributions “Structural” Characterizations, e. g. , • prevailing patterns/trends • relations • dominant elements

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 – Storage 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. ) Organization Separate reserve area? Batching? Different types of storage? Processes Receiving Resources Storing Types of storage Storage unit Orderpicking Types of sorting eq. Shipping

Tactical-level concerns (Rouwenhorst et. al. ) Organization Forward and reserve area Batch size Storage concept Pick zones Processes Resources Receiving Storing Tech. zones Number of docks Orderpicking Peripheral eq. and workforce capacity Storing and Picking eq. capacity Layout Shipping Number of docks

Operational-level concerns (Rouwenhorst et. al. ) Organization Dock Replenish. Assignment Policy Storage plan Batch formation Dock Assignment Picking task Assignment Routing Dwell point Chute Assignment Receiving Storing Orderpicking Workforce Assignment Resources Processes Shipping

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 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.