STORAGE AND WAREHOUSING

PERANCANGAN FASI L I TAS L OGI STI K

RAHMAD INCA LIPERDA, M.ENG
W EEK 4 - 5

Week 3
 OUTLINES

▪ Introduction
▪ Warehouse function
▪ R/S systems
▪ Warehouse design

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 INTRODUCTION

• In business, many manufacturing and distribution companies are faced with :

- Unreliability of suppliers
- The need to improve customer service
- The need to respond the customer demands quickly
• To maintain sufficient inventory regarding those challenges, maintaining warehouse(s) are
significantly required

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 INTRODUCTION
C A S E O F N I K E WA R E H O U S E

• Nike built a large distribution warehouse in

Belgium in the mid-1990s
• One of their main business objectives is to
serve 75% of their customers within 24 hours
• Warehousing facilities are necessarily required
because many of their manufacturing plants
and suppliers are overseas - in the Far East

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 WAREHOUSE FUNCTIONS

• Temporary storage of goods

• Put together customer orders
• Serve as customer service facility
• Protect goods
• Segregate hazardous or contaminated materials
• Perform value-added services
• Inventory

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 STORAGE AND RETRIEVAL SYSTEMS

Two types of S/R systems :

• Person to item
System in which the storage racks are stationary and a person or machine goes to the storage
location of items and picks them
• Item to person
System in which the items come to the end of an aisle (from their storage location) where an
operator or a transportation mechanism sends the items to their point of use (e.g., the use of
flow racks)

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 STORAGE AND RETRIEVAL SYSTEMS

https://www.youtube.com/watch?v=YYdgLAlogpY

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 WAREHOUSE DESIGN
WA R E H O U S E L O C AT I O N

• Location is the first and foremost problem that must be addressed in warehouse design
• Considerations :
- Improving customer service
- Responding the customer needs quickly
• Specific decisions should be addressed regarding the warehouse location :
- How many warehouse must be built?
- Where should each be built?
- How large should each warehouse be?

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 WAREHOUSE DESIGN
WA R E H O U S E L AY O U T

• The warehouse layout depends on :

- The items stored
- Space available in the warehouse
- Height
- Storage medium used
- S/R methods
- Layout of road and rail tracks around the warehouse
- Etc.

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 WAREHOUSE DESIGN
WA R E H O U S E L AY O U T

Warehouse Layout Example

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 WAREHOUSE DESIGN
A R E A S I N A WA R E H O U S E

A warehouse is generally divided into the following functional areas :

• Receiving
• Shipping
• Staging for cross-docking operation
• Reserve
• forward

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 WAREHOUSE DESIGN
A R E A S I N A WA R E H O U S E

Flow 1 (receiving-cross docking-shipping)

Flow 2 (receiving-reserve-shipping)
Receiving

Shipping
Reserve
Flow 3 (receiving-reserve-forward-shipping)

Forward

Flow 4 (receiving-forward-shipping)

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 WAREHOUSE DESIGN
S TO R A G E P O L I C I E S

There are five main policies used to store incoming items in the warehouse :
• Random storage policy
• Dedicated storage policy
• Cube-per-order index (COI) policy
• Class-based storage policy
• Shared storage policy

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 WAREHOUSE DESIGN
S TO R A G E P O L I C I E S

Random storage policy

• Storing an incoming item in any available location
• If more than one location is available for storage, theoretically, the incoming item has an equal
probability of being assigned to any of the available locations
• In practice, it gets assigned to the closest available space

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 WAREHOUSE DESIGN
S TO R A G E P O L I C I E S

Random storage policy Step 1 Step 2

Distance Distance
Rack Rack Priority
5 to I/O to I/O
Rack 1 Rack 5 Rack 9 Rack 13
1 70 8 20 1
2 60 12 20 1
10
3 50 7 30 2
4 40 11 30 2
Rack 2 Rack 6 Rack 10 Rack 14
5 50 4 40 3
6 40 6 40 3
7 30 10 40 3
Rack 3 Rack 7 Rack 11 Rack 15 8 20 16 40 3
9 50 3 50 4
10 40 5 50 4
11 30 9 50 4
Rack 8 Rack 12 Rack 16 12 20 15 50 4
Rack 4
13 70 2 60 5
14 60 14 60 5
15 50 1 70 6
20 16 40 13 70 6
5

I/O Point

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 WAREHOUSE DESIGN
S TO R A G E P O L I C I E S

Dedicated storage policy

• Requires assignment of items to pre-specified locations that depend on the item type being
stored
• The space dedicated to each item must equal the maximum level of inventory of that item
• Has advantages in retrieving numerous types of items

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 WAREHOUSE DESIGN
S TO R A G E P O L I C I E S

Dedicated storage policy

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 WAREHOUSE DESIGN
S TO R A G E P O L I C I E S

Model for dedicated storage policy

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 WAREHOUSE DESIGN
S TO R A G E P O L I C I E S

Model for dedicated storage policy

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 WAREHOUSE DESIGN
S TO R A G E P O L I C I E S

Model for dedicated storage policy

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 WAREHOUSE DESIGN
S TO R A G E P O L I C I E S

Model for dedicated storage policy

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 WAREHOUSE DESIGN
S TO R A G E P O L I C I E S

Model for dedicated storage policy

I/O Point

2 3 3 2

2 2 1 4
I/O Point

2 4 4 1

4 4 4 1

I/O Point

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 WAREHOUSE DESIGN
S TO R A G E P O L I C I E S
COI policy
• Is operationally very simple and widely used
• This policy has a large number of S/R requests and requires less storage space near the IO point
• Is defined as the ratio of the item’s storage space requirement (its cube) to the number of S/R
transactions for that item
• COI procedures :
- List the items in a non-decreasing order of their COI
- Allocate the first item in this list to be required number of storage spaces that are nearest to the
input/output (I/O) point
- Allocate the second item in the list to the required number of storage spaces that are closest to
the I/O point and so on until all the items are allocated

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 WAREHOUSE DESIGN
S TO R A G E P O L I C I E S
Model for COI policy

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 WAREHOUSE DESIGN
S TO R A G E P O L I C I E S
Model for COI policy

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 WAREHOUSE DESIGN
S TO R A G E P O L I C I E S
Model for COI policy

I/O Point

2 2 2 4

2 3 1 4
I/O Point

2 3 1 4

4 1 4 4

I/O Point

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 WAREHOUSE DESIGN
S TO R A G E P O L I C I E S

Class-based storage policy

• Based on Pareto’s observation
• Pareto effect : A small percentage of a country’s (or world’s) population has the most wealth.
Conversely, a large percentage of the population has the least wealth
• Examples :
- a company making multiple products may generate most of its revenues (say, 80%) from
20% of its products
- 20% of the students in an industrial engineering class may take up 80% of the instructor’s
office hours

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 WAREHOUSE DESIGN
S TO R A G E P O L I C I E S

Class-based storage policy

• Examples :
- In a warehouse, 80% of the S/R activity is due to 20% of the items,15% due to 30% of items,
and the remaining 5% is due to 50% of the items
1. Thus it can be classified into three classes – A, B, and C
2. If the level of S/R activity is between 0% and 5% of the total S/R activity, the item is a
class C item
3. If it is between 5% and 20% the item is a class B item
4. Otherwise it is a class A item

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 WAREHOUSE DESIGN
S TO R A G E P O L I C I E S

Shared storage policy

• As in the random storage policy, the same storage space may hold different items over time
• However, the allocation of items to storage spaces is not random but carefully controlled
• Fast-moving items are stored in spaces near the I/O point
• Slow-moving items are stored in spaces farther away from the I/O point
• The challenges :
- The time spent in inventory may vary a lot even for the same product
- Different items may reach their maximum inventory levels at different times
• Shared storage policy can increase system throughput and improve space utilization

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 WAREHOUSE DESIGN
L AY O U T A N D L O C AT I O N O F D O C K S

• The decisions regarding the typical dock layouts :

- Will pickup by retail customers be allowed?
- Will the warehouse be serviced by trucks of limited type and size, or will there be a variety of
trucks (large and small) from different freight carriers?
- Should shipping and receiving be combined or should they be separated?
- The layout of the road/rail network
- Room available for maneuvering trucks and operating warehouse doors/gates

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 WAREHOUSE DESIGN
L AY O U T A N D L O C AT I O N O F D O C K S

• The number of docks must be carefully determined by considering :

- Can shipping and receiving be arranged at different times in the day?
- Average and peak number of trucks or rail cars handled per day
- Average and peak items per order
- Seasonal highs and lows
- Types of load handled, their sizes, shapes, whether they are cartons, cases, or pallets
- Is protection from weather elements required while loading/unloading trucks?

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 WAREHOUSE DESIGN
L AY O U T A N D L O C AT I O N O F D O C K S

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 WAREHOUSE DESIGN
E X E R C I S E : D E D I C AT E D P O L I C Y F O R B L A B L A I N C .
Out Point

5 5
1 6 10 14
10

2 7 11 15

20
3 16

4 8 12 17

5 9 13 18

In Point

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 Out Point

1 6 10 14
10

2 7 11 15

20
3 16

4 5 8 12 17

5 9 13 18
5

In Point
 Out Point

1 6 10 14
2 7 11 15
3 16
4 8 12 17
5 9 13 18
In Point
 Out Point

5
1 6 10 14
10
5
2 7 11 15
5

3 16
4 8 12 17
5 9 13 18
In Point
 WAREHOUSE DESIGN
E X E R C I S E : D E D I C AT E D P O L I C Y F O R B L A B L A I N C .
fik and Si Value dkj Value Wij Value
Item In Point Out Point Required Space d kj W ij
Rack Area
1 2 3 4
1 150 25 3 In Point Out Point
1 70 70 1 20416.7 6370 7770 48125
2 60 5 5
2 60 60 2 17500 5460 6660 41250
3 96 15 4 3 14583.3 4550 5550 34375
3 50 50
4 175 100 6 4 60 60 4 17500 5460 6660 41250
5 70 70 5 20416.7 6370 7770 48125
6 10 10 6 2916.67 910 1110 6875
7 20 20 7 5833.33 1820 2220 13750
cik Value 8 11666.7 3640 4440 27500
8 40 40
Item Cost (in) Cost (out) 9 50 50 9 14583.3 4550 5550 34375
10 10 10 10 2916.67 910 1110 6875
1 5 5
11 20 20 11 5833.33 1820 2220 13750
2 7 7 12 11666.7 3640 4440 27500
12 40 40
3 4 4 13 50 50 13 14583.3 4550 5550 34375
4 15 15 14 70 70 14 20416.7 6370 7770 48125
15 60 60 15 17500 5460 6660 41250
16 50 50 16 14583.3 4550 5550 34375
17 60 60 17 17500 5460 6660 41250
18 70 70 18 20416.7 6370 7770 48125

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 WAREHOUSE DESIGN
E X E R C I S E : D E D I C AT E D P O L I C Y F O R B L A B L A I N C .
Out Point

5 5
1 6 10 14
Item 2 Item 4 Item 4 Item 2
10

2 7 11 15
Item 3 Item 4 Item 4 Item 3

20
3 16
Item 1 Item 1

4 8 12 17
Item 3 Item 4 Item 4 Item 2

5 9 13 18
Item 2 Item 3 Item 1 Item 2

In Point

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THANK
YOU