1. 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

2. 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

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

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, 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

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
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. Yoon & Sharp’s design procedure
MANAGERIAL CONSIDERATIONS
PRODUCT DATA
ORDER DATA
DATA ANALYSIS
DATA ANALYSIS
INPUT
STAGE
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

11. Defining Department and Subsystem structure
Department B
Department A
Transport Equipment 1
Subsystem B1
Subsystem A1
Subsystem A2
Transport Equipment 2
Subsystem B2
Subsystem An
Transport Equipment k
Subsystem Bn
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

12. 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

13. 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

14. 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

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

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

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

18. 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

19. 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.