A model based evaluation of a commonly used rule of thumb for warehouse layout

Abstract

A model is formulated to describe the cost effects of alternative warehouse layouts in a dedicated storage warehouse that utilizes dual address order picking cycles. The model is utilized to evaluate a common warehouse layout rule of thumb where stock levels are determined using economic order quantities, and stock locations are obtained using the cube per order index. A simple heuristic procedure is devised to utilize the cost model to obtain warehouse layouts with lower total inventory and order picking cost than those obtained using the rule of thumb. Four test problems are generated to assess the difficulty of obtaining improved warehouse layouts. It is shown that the heuristic procedure can achieve significantly improved warehouse layouts with minimal computational effort.