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
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, 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
Order flow time
throughput
fill rate
volume flexibility/storage capacity
mix flexibility
Cost
Quality
Investment +
Operational
Space/Equipment/Labor
Product quality
Order accuracy
=> 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.)
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
Receiving
Storing
Tech. zones
Number
of docks
Orderpicking
Resources
Peripheral eq. and workforce capacity
Storing and Picking eq. capacity
Layout
Shipping
Number
of docks
Operational-level concerns
(Rouwenhorst et. al.)
Organization
Dock
ReplenishAssignment ment 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.
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–
–
–
–
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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,
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–
–
–
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–
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project inception
data acquisition
functional specification
technical specification
selection of means and equipment
layout
selection of planning and control policies