The Warehouse Design and Control Problem

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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 379-389, 1996

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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

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Topics already covered (cont.)

• Warehouses processes and the associated
  material flow

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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

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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

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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

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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
gt Multi-criteria Optimization Problem!
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Warehouse types/missions and Competitive
Strategies

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

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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
• gt 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)
• gt focus on response time but also accuracy and
  cost

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Yoon Sharps design procedure
MANAGERIAL CONSIDERATIONS
PRODUCT DATA
ORDER DATA
INPUT STAGE
DATA ANALYSIS
DATA ANALYSIS
SPECIFICATION OF ORDER PICK SYSTEM STRUCTURE
SPECIFICATION OF EQUIPMENT
SPECIFICATION OP. STRATEGIES
SELECTION STAGE
MATERIAL FLOW
INFORMATION FLOW
SUBSYSTEM I
SUBSYSTEM II
SUBSYSTEM N
EVALUATION STAGE
SUBSYSTEM RECONCILIATION
EVALUATION SELECTION
OVERALL PERFORMANCE ANALYSIS
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Defining Department and Subsystem structure
Department B
Department A
Subsystem B1
Transport Equipment 1
Subsystem A1
Subsystem A2
Subsystem B2
Transport Equipment 2
Subsystem An
Subsystem Bn
Transport Equipment k
Storage structure (e.g., Gravity Flow Rack)
Transport Equipment (e.g., Belt Conveyor)
Transport Equipment (e.g., forklift)
Transfer Device
Storage Equipment
Retrieval Equipment (e.g., pick to light)
Transfer Device
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Determining the basic system structure

• Product data
• Activity level
• requested quantities
• product properties
• vendor types

• 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

• Order data
• number of line items
• number of items
• cubic volume
• shipping priorities
• product correlation

Managerial requirements / company strategy
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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
Summary statistics
SKU data
Order data
Distributions
Location data

• Structural
• Characterizations, e.g.,
• prevailing patterns/trends
• relations
• dominant elements

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Addressing the problem complexityHierarchical
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

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Strategic-Level Concerns (Rouwenhorst et.al.)
Batching?
Separate reserve area?
Different types of storage?
Types of storage
Types of sorting eq.
Storage unit
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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
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Operational-level concerns(Rouwenhorst et. al.)
Organization
Dock Assignment
Batch formation
Dock Assignment
Replenish- ment Policy
Storage plan
Picking task Assignment
Routing
Dwell point
Chute Assignment
Processes
Receiving
Storing
Orderpicking
Shipping
Workforce Assignment
Resources
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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

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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.