The Warehouse Design and Control Problem Based on Rouwenhorst et. al.,EJOR, Vol. 122, pgs , 2000 Yoon, C. S. and Sharp, G., IIE Trans., Vol. 28, pgs , 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 ReceivingShipping Reserve Storage and Pallet Picking Case Picking Broken Case Picking Accumulation, Sortation & Packing Cross-docking Direct putaway to reserve Direct putaway to primary 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, 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 Quality Cost Investment + Operational Space/Equipment/Labor Product quality Order accuracy Order flow time throughput fill rate volume flexibility/storage capacity mix 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

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

Defining Department and Subsystem structure Department A Department B Subsystem A1 Subsystem A2 Subsystem An Subsystem B1 Subsystem B2 Subsystem Bn Transport Equipment 1 Transport Equipment 2 Transport Equipment k Storage structure (e.g., Gravity Flow Rack) Transfer Device Storage Equipment Retrieval Equipment (e.g., pick to light) Transfer Device Transport Equipment (e.g., forklift) 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 sub- systems 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. WAP SKU data Order data Location data Summary statistics 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.) ReceivingStoringOrderpickingShipping Resources Processes Organization Separate reserve area? Batching? Different types of storage? Types of storage Storage unit Types of sorting eq.

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

Operational-level concerns (Rouwenhorst et. al.) ReceivingStoringOrderpickingShipping Resources Processes Organization Dock Assignment Replenish- ment Policy Storage plan Dock Assignment Batch formation Picking task Assignment 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 –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.