Solving the forward-reserve allocation problem in warehouse order pickingsystems

Abstract

Many warehouses store at least some goods in two areas, a reserve areathat is efficient for storage and a forward area that is efficient fororder picking. The forward-reserve allocation problem determines the set ofStock-Keeping Units and their space allocations in the forward area to maximizethe forward area's benefit by trading off the relevant costs of orderpicking and internal replenishment. The mathematical model of this decisionresembles the classical knapsack problem with the additional complexity that ithas a discontinuous nonlinear cost function. A simple greedy heuristic has beenproposed in the literature to solve this problem. This paper proposes analternative branch-and-bound algorithm that can quickly solve the problem tooptimality. Heuristic and optimal solutions are numerically compared usingproblem instances based on real warehouse data. Results suggest that theheuristic solutions are very close to the optimal ones in terms of both theobjective value and the forward assignment.