The Warehouse Design and Control Problem

1. The Warehouse Design and Control Problem Based on Rouwenhorst et. al. EJOR, Vol. 122 pgs 515-533, 2000

2. Topics already covered • The roles of the Warehouse in contemporary distribution networks • Buffer • Consolidation • Value Adding Processing

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

4. 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

5. 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

6. 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

7. Decision / Performance Criteria Order flow time throughput fill rate volume flexibility/storage capacity mix flexibility Responsiveness Investment + Operational Space/Equipment/Labor Cost Product quality Order accuracy Quality => Multi-criteria Optimization Problem!

8. 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!

9. 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

10. 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

11. Organization Processes Receiving Storing Orderpicking Shipping Resources Strategic-Level Concerns (Rouwenhorst et.al.) Batching? Separate reserve area? Different types of storage? Types of storage Types of sorting eq. Storage unit

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

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

14. 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

15. 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.

16. 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