Int. J.

Production Economics 264 (2023) 108976

Contents lists available at ScienceDirect

International Journal of Production Economics

journal homepage: www.elsevier.com/locate/ijpe

Responsive pick face replenishment strategy for stock allocation to fulfil

e-commerce order
H.Y. Lam *, G.T.S. Ho, Daniel Y. Mo, Valerie Tang
Department of Supply Chain and Information Management, The Hang Seng University of Hong Kong, Shatin, Hong Kong

A R T I C L E I N F O A B S T R A C T

Keywords: In the rapidly growing e-commerce industry, pallet picking is no longer feasible as the stock keeping units (SKUs)
Replenishment strategy change from the pallet level to the carton or item level. Thus, an effective order-picking process focusing on fast
Order picking and efficient retrieval of SKUs from shelves is required to fulfil numerous small lot-sized e-commerce orders
Stock allocation
within a short time. This study investigates a responsive pick face replenishment (RPFR) strategy that divides the
E-commerce order fulfilment
Pick-face forward area
high-bay racks in the distribution centres (DCs) into two parts: the upper-deck reserve areas and the pick-face
forward areas to improve the operational efficiency in order picking. To address the fluctuating order demand
and limited space in the pick-face forward areas, the proposed RPFR system integrates a predictive analytics
algorithm with an adaptive network-based fuzzy inference system (ANFIS) and adaptive genetic algorithm-based
stock allocation model to generate an optimal stock replenishment plan. By predicting the order demand of each
SKU in the next time interval, the types of selected SKUs and their quantities to be loaded into the pick-face
forward areas are determined. Numerical experiments are performed to validate the system performance, and
comparative analyses are conducted to determine the best parameter settings for the models.

1. Introduction
In the present digitalised era, e-commerce has become a global trend
that has a competitive advantage in the business world. According to
Statista (2022), retail e-commerce sales are expected to reach approxi­
mately 5.5 trillion U.S. dollars worldwide. This figure is expected to
increase by 56% over the next few years, reaching about 8.1 trillion
dollars by 2026. The Chinese market is the largest e-commerce market in
the world, with its internet sales accounting for nearly half of the
country’s retail sales, followed by the United Kingdom (36%), South
Korea (32)%, and Denmark (20%). Instead of visiting a physical store,
customers are increasingly placing orders through different e-commerce
channels, and shipments are sent directly to the designated locations (Li
et al., 2020; Roggeveen and Sethuraman 2020). The tremendous change
in customer purchase behaviour has considerably increased the number
of e-commerce orders received by distribution centres (DCs), presenting
challenges for third-party logistics service providers (LSPs). Conven­
tionally, a DC consolidates daily delivery orders from brick-and-mortar
stores for regular stock replenishment (Boysen et al., 2021; Vanelslander
et al., 2013). At fixed time intervals, the DC arranges order-picking ac­
tivities to fulfil the delivery orders. Once an order is received, pickers
retrieve SKUs from pallets stored in DC and then assemble a new pallet
with multiple products for delivery (Gu et al., 2007; De Koster et al.,
2007). In contrast to regular stock replenishment orders with a stable
demand, fragmented and discrete e-commerce orders are usually
received in small lot-sizes, which is a consequence of high product va­
riety (Leung et al., 2018; Luo et al., 2019). In addition, to achieve high
customer satisfaction, e-retailers often guarantee next-day or even
same-day delivery to end customers (Xi et al., 2020). This results in
pressure and complexity for DCs as they have to proceed with a high
volume of e-commerce orders under a tight schedule. To ensure timely
delivery, an effective order-picking strategy focusing on the fast and
efficient retrieval of stock keeping units (SKUs) from shelves is critical
for fulfilling orders within a short interval.
DCs with a high ceiling and high-bay racks are typically set up to
store pallet-based SKUs to fully utilise the storage capacity (Boysen
et al., 2019). Each storage column is divided into two or three decks, and
as many pallets as possible are stored on each high-bay rack. However,
when handling numerous small-lot-sized e-commerce orders, bulk
picking on pallets is not feasible as the SKUs change from the pallet level
to either the carton or item level (Bahrami et al., 2019; Battini et al.,
2018). In this situation, if the pallets are stored in the upper-deck reserve

* Corresponding author.
E-mail addresses: cathylam@hsu.edu.hk (H.Y. Lam), georgeho@hsu.edu.hk (G.T.S. Ho), danielmo@hsu.edu.hk (D.Y. Mo), valerietang@hsu.edu.hk (V. Tang).

https://doi.org/10.1016/j.ijpe.2023.108976
Received 8 June 2022; Received in revised form 30 May 2023; Accepted 12 July 2023
Available online 20 July 2023
0925-5273/© 2023 Elsevier B.V. All rights reserved.
H.Y. Lam et al.
area, pickers must use material handling equipment, such as forklift
trucks, to first unload the pallet from the upper-deck reserve areas to the
ground, then pick the required SKU in pieces, and finally return the
pallet back to its storage location in the upper-deck reserve area. This
type of design increases the retrieval time and reduces the order-picking
efficiency (Van Gils et al., 2018b). To cope with the unique character­
istics of small-lot-sized e-commerce orders, logistics practitioners have
adopted a pick-face order picking approach (Füßler and Boysen 2017;
Jiang and Huang 2022; Walter et al., 2013). The high-bay racks are
divided into two parts: the upper-deck reserve area and the bottom
pick-face forward area. The reserve area is located at the upper decks of
the high-bay racks, which serve as a storage space for SKUs at the pallet
level. The pick-face forward area is located in the bottom row of the
high-bay racks, where pickers can directly perform piece picking,
without requiring a material handling equipment, such as forklift trucks.
By relocating the SKUs from the upper-deck reserve areas to the
pick-face forward areas regularly, pickers can manually pick SKUs when
an order arrives. This increases the efficiency of order picking by
reducing the item retrieval time, equipment waiting, and operation time
(Guo et al., 2021).
Although pick-face order picking is an effective approach for logistics
practitioners, it is always challenging for DCs to conduct effective
replenishment in the pick-face forward area (Shah and Khanzode 2018).
Since the pick-face forward area for direct picking has a relatively
limited space, only a subset of the selected SKUs can be loaded into the
pick-face forward area each time, while the remaining stocks are stored
in the upper-deck reserve areas. According to current practices of
manual pick-face order picking, the replenishment activities are gener­
ally conducted at regular intervals, i.e. after each pick wave or once per
day. When the order picking activities are performed during the pick
wave, no replenishment activity will be arranged to prevent blocking of
pickers to pick the required SKUs from the forward areas. Hence, it is
critical for the logistics practitioners to plan ahead and forecast the order
demand accurately to ensure that enough SKUs are available for picking
at the bottom pick-face forward areas at a given time.
Motivated by the operational problem of handling e-commerce or­
ders, this study designed a responsive high-bay rack pick face replen­
ishment strategy for dynamically adjusting the type of SKU and its
quantity to be placed into the bottom pick-face forward areas based on
the predicted order demand. The main contribution of this study is the
development of a responsive pick face replenishment (RPFR) system,
which integrates a predictive analytics algorithm with an adaptive
network-based fuzzy inference system (ANFIS) and an adaptive genetic
algorithm GA-based item allocation algorithm to replenish the stock in
the pick-face forward areas. The proposed predictive ANFIS model
considers the key features that contribute to the fluctuations in the e-
Fig. 1. Comparison between brick-and-mortar stores and e-commerce retailers, and, traditional warehouses and e-commerce DCs.
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International Journal of Production Economics 264 (2023) 108976
commerce order demand and predicts the order quantity of each SKU in
the next time interval. In addition, owing to the limited space of the
pick-face forward areas, a GA-based stock allocation model was
designed to determine the type of SKUs to be loaded into the pick-face
forward areas.
The remaining paper is organised as follows. Section 2 describes the
literature on order picking, pick face replenishment strategy, and ANFIS.
Section 3 presents the architecture of the proposed RPFR system, fol­
lowed by a case study in Section 4. In Section 5, numerical experiments
and comparative analyses are presented, and conclusions are presented
in Section 6.
2. Literature review
2.1. Characteristics of e-commerce orders
The difference in order characteristics between brick-and-mortar
stores and e-commerce retailers is summarized in Fig. 1. Boysen et al.
(2019) discussed the difference of order characteristics in terms of order
size, assortment, and lead time pressure. First, the order size of e-com­
merce retailers is generally small, with only one or a few pieces in single
or limited order lines, while the order size of brick-and-mortar stores are
typically large (Zennaro et al., 2022). This is because brick-and-mortar
stores have a continuous demand based on customer sales so that
large-sized orders with several pieces in multiple order lines are
generated (Martins et al., 2018). For assortment, the variety of SKUs for
e-commerce retailers is usually larger than that in brick-and-mortar
stores due to the storage cost. With a limited space, the cost for stor­
ing multiple types of SKUs in brick-and-mortar stores would be higher
(Kök et al., 2008; Mehra et al., 2018). Meanwhile, e-commerce retailers
would make use of third-party logistics warehouse to store a large va­
riety of SKUs at a lower cost. For lead time pressure, e-commerce re­
tailers generally offer same or next day delivery to its customers,
resulting in a tight delivery schedule. Meanwhile, brick-and-mortar
storesarrange demand and order within a fixed and sufficient period,
thus facing less delivery pressure (Holzapfel et al., 2016).
Different order characteristics between brick-and-mortar stores and
e-commerce retailers generate different ways to handle the orders in
traditional warehouses and e-commerce DCs, as shown in Fig. 1. Ac­
cording to Leung et al. (2018), order arrival and the nature of traditional
warehouses are regular and mostly for stock replenishment, while
irregular, fragmented, and discrete orders are received by e-commerce
DCs. In addition, given that the orders from brick-and-mortar stores are
received at a fixed time interval, there is relatively more time buffer to
fulfill the orders (He et al., 2021). In contrast, the time for order
fulfillment is tight for e-commerce DCs due to next- or same-day delivery
H.Y. Lam et al.
requested by the e-commerce retailers (Ishfaq and Raja, 2018). More­
over, Zhang et al. (2020) suggested that the stock locations and storage
policy are different for traditional warehouses and e-commerce DCs. For
traditional warehouses, single or just a few SKUs at the pallet level are
usually stored in large bulk holding spaces. Conversely, multiple SKUs
may be stored in the same locations, bins, or storage lots in e-commerce
DCs. From the study above, it is found that the complexity of e-com­
merce orders brings challenges to e-commerce DCs in terms of order
fulfilment to ensure timely delivery.
2.2. Order fulfillment in e-commerce DCs
To increase the efficiency of order fulfilment, immense research has
been conducted on various operational problems in e-commerce DCs,
such as storage assignment (Calzavara et al., 2019; Reyes et al., 2019),
order picking (Ardjmand et al., 2018; Jaghbeer et al., 2020; Van Gils
et al., 2018a; Yang et al., 2020; Zhang et al., 2019a), and layout design
(De Koster et al., 2017; Hu and Chuang 2022). Among these, efficient
order picking has received the most attention as it is the most
labour-intensive and time-consuming process in DCs (Vanheusden et al.,
2022). For instance, piece, pallet, batch, wave, batch, and zone pickings
are common order picking strategies (Cergibozan and Tasan, 2019; De
Koster et al., 2007; Van Gils et al., 2019). Moons et al. (2019) proposed
simultaneous integration of the order picking and vehicle routing
problem to reduce the time between placing an order and receiving the
goods in business-to-customer (B2C) e-commerce sales. Weidinger et al.
(2019) considered a picker-routing problem in mixed-shelf warehouses,
where items of the same SKU are randomly spread all over the ware­
house shelves and multiple orders are assembled concurrently. Kong
et al. (2020) balanced picking simultaneity and sorting punctuality for
e-commerce order fulfilment, wherein the items of a pick wave are
picked by several pickers simultaneously so that the subsequent sorting
process can start as early as possible.
2.3. Pick face replenishment strategy
To process numerous small orders, the pick-face replenishment
strategy, also called the forward-reserve problem, has been considered
an effective approach in recent studies, which could expedite the order-
picking process (Gu et al., 2010). By dividing the deep-lane storage rack
into two parts, namely bulk storage (or reserve areas) and pick face (or
forward areas), pickers can pick the popular SKUs in the pick-face for­
ward areas easily, while replenishment can be done from the reserve
areas to the pick-face forward areas, if necessary. Unproductive travel
between the storage and dedicated picking locations can be eliminated,
thus minimising the order picking time. In previous studies, various
aspects have been considered to improve the order-picking efficiency.
Walter et al. (2013) suggested that SKUs should be stored in the forward
area, space allocations should be made for each SKU, and the overall size
of the forward area should be examined when implementing the
pick-face replenishment strategy. Schwerdfeger and Boysen (2017)
considered replenishing the crane-supplied pick face as an SKU
switching problem by minimising the maximum number of switches
between successive job pairs. The problem of picker blocking during the
SKU switching time was discussed, which would increase the picking
time and eventually affect the overall picking performance. Shah and
Khanzode (2018) considered a non-uniform unit load in a small-sized
fast pick area to reduce the storage wastage and improve the
throughput. Excessive loading in the forward pick area should be avoi­
ded as storage waste is created if the loaded items are not picked in the
next pick wave. Bahrami et al. (2019) examined the performance of
different storage assignment strategies in forward-reserve areas by
considering the total picking time and order lead time while considering
congestion. Later, Jiang et al. (2020) proposed a picking-replenishment
synchronisation mechanism to attain a balance between replenishment
efforts and picking efficiency by using mobile robots to bring items to
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International Journal of Production Economics 264 (2023) 108976
the forward area for picking. According to the above-mentioned litera­
ture, the pick face replenishment strategy can effectively improve the
order picking efficiency by replenishing SKUs in the forward pick area.
However, to achieve a high level of operational efficiency without un­
necessary wastage in the storage or switching process, the fundamental
concern is selecting the SKU that can be stored in the forward area and
determining the quantity of each selected SKU in the forward pick area
before the pick wave (Accorsi et al., 2014; Wu et al., 2020; Yuan et al.,
2018).
2.4. Order demand prediction with ANFIS
Owing to the limited size of the pick-face forward areas, research has
been conducted to tackle the stock allocation problem by predicting the
order demand (Kong et al., 2021; Zhang et al., 2019b) and optimising
the allocation quantity (Jiao et al., 2018; Ren et al., 2020). The adaptive
network-based fuzzy inference system (ANFIS) is a machine learning
approach for prediction modelling. ANFIS has the self-learning capa­
bility to learn through a dataset and has the capacity to adjust the pa­
rameters of the model across an organisation (Su and Cheng 2016).
Through the training processes, the ANFIS system can modify the
membership functions and rules in the hidden layers using a hybrid
learning algorithm. It has been demonstrated as an effective technique
for explaining the relationship between inputs and outputs without
overreliance on expert knowledge and experience (Walia et al., 2015). In
recent years, research on ANFIS has been conducted in various areas to
make time-series forecasting decisions, including air quality prediction
(Al-Qaness et al., 2021), stock market forecasting (Ghashami and
Kamyar 2021; Kristjanpoller and Michell 2018), and energy consump­
tion (Adedeji et al., 2022; Perveen et al., 2019). However, ANFIS has
limited supply chain order fulfilment applications. Sremac et al. (2018)
applied ANFIS to determine the economic order quantity. Leung et al.
(2019) proposed an autoregressive-adaptive neuro-fuzzy inference sys­
tem (AR-ANFIS) approach for forecasting e-commerce order arrivals.
The time-series characteristics of e-commerce order arrival patterns
were considered to determine the number of arriving e-orders that can
be consolidated before order batching. Instead of forecasting e-order
arrival patterns, the quantity of SKUs in upcoming e-commerce orders is
also considered as an important factor affecting the decision of allo­
cating stock on shelves.
2.5. Optimising stock allocation with GA
With the predicted SKU demand, the order-picking efficiency can be
further improved by allocating sufficient stock in the picking area to
minimise the travel time, distance, and picking delays (Yener and Yaz­
gan 2019). If excessive SKU quantity is loaded onto the pick-face for­
ward areas, more space is occupied, which leads to storage waste, and it
may not be possible to load all required SKUs for the next pick wave. In
contrast, long waiting and picking times are expected if an insufficient
quantity of SKU is found on the pick-face forward areas. Hence, opti­
mising stock allocation with the type and quantity of SKU becomes
critical in order fulfilment. Genetic algorithm (GA) is considered an
effective approach for solving NP-hard problems and is widely adopted
in order picking and product allocation problems (Ardjmand et al.,
2020; Tu et al., 2021). Yan et al. (2018) proposed a multi-objective
goods location assignment model based on GA that considered effi­
ciency priority, similar product adjacency, and shelf stability. Jiang
et al. (2021) considered a scattered storage strategy, which allows the
same product to be placed in multiple storage locations and applies GA
to the weighted sum of distances between the products. Öztürkoğlu
(2020) solved a product allocation problem in a block-stacked ware­
house with the objective of minimising the total travel distance and
maximising the average storage usage. Zapata-Cortes et al. (2021)
designed a multi-objective GA model to determine a set of possible
optimal goods allocations to reduce the handling costs and operation
H.Y. Lam et al. International Journal of Production Economics 264 (2023) 108976

time. areas.
In summary, motivated by the practical needs of DCs to handle more
small lot-sized e-commerce orders, this study focuses on adopting a 3. Design of the responsive pick face replenishment (RPFR)
responsive pick-face replenishment strategy, which is specifically system
designed for DCs with high-bay racks. Unlike previous studies consid­
ering machine-supported pick-face replenishment as an SKU switching Fig. 2 shows the architecture of the RPFR system. The system consists
problem and solved it by minimising the blocking time, this study fills of three modules: (i) module 1, E-order data collection module (EDCM);
the research gap in the literature by modelling and predicting the SKU (ii) module 2, E-order quantity prediction module (EQPM); (iii) module
demand of upcoming e-commerce orders using ANFIS, thereby 3, selective stock allocation module (SSAM).
addressing the problem of picker blocking. The predicted result is
further used in the GA model to formulate the allocation plan capable of
dealing with the constraint of the limited size of the pick-face forward

Fig. 2. Architecture of the RPFR system.

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H.Y. Lam et al. International Journal of Production Economics 264 (2023) 108976

3.1. Module 1: E-order data collection module (EDCM)

In this module, sales and operation-related data are collected to

analyse the past order pattern and predict the order quantity. First, two
types of sales-related data are stored in a cloud database: e-order sales
data and product information. When a customer places an e-order
through an online shopping platform, a sales order is created, and the e-
order is passed to the backend DC to process the order. The e-order sales
data, including customer name, contact, and delivery address, as well as
the items ordered and the corresponding quantity, are extracted from
the e-order and stored in the cloud. Once the e-order is received, product
data, including the product name, product packaging capacity, lot
number, item code, product price, and storage location, are also
retrieved from the inventory system in the DC. Second, two types of
operation-related data, including operations data and inventory data,
were collected from the DC. The DC checks for the availability of the
current inventory level and arranges order picking of resources, such as
order pickers and machine handling equipment. Other relevant data
may also include the product brand, suppliers, and place of origin.
Fig. 3. Design of a generic five-layer ANFIS architecture with k inputs and
3.2. Module 2: E-order quantity prediction module (EQPM) one output.

The main purpose of this module is to define an ANFIS structure to
predict the order quantities of specific products. ANFIS is a machine
learning technique that combines an adaptive neural network with fuzzy
logic methods, providing a map to relate inputs and outputs to facilitate
the forecasting processes. Integrating the fuzzy-logic approach can
ensure fast convergence and high accuracy in finding a feasible solution
(Zhang and Lei, 2017).
The ANFIS architecture in EQPM consists of five fixed layers, and
each layer contains specific processing elements. ANFIS is a hybrid
learning algorithm that combines the least-squares method and the
gradient descent method in the training process to determine the
optimal parameters (Jang, 1996; Walia et al., 2015). The algorithm
belongs to a class of adaptive networks that are functionally equivalent
to fuzzy inference systems. Table 1 lists the notation table of the ANFIS
model.
The ANFIS model parameters were divided into two categories:
premise and consequent. The premise parameters of the rules are non-
linear, where Aik is the fuzzy sets of input variables, while the conse­
quent parameter pik is linear, and fi is the output of the rules. With k
inputs (xk ), the general form of the if–then fuzzy rules is defined as
follows:
the nodes are shown as a square, which represents the degree of mem­
bership of linguistic variables using Equation (2), where O1,i represents
the degree of membership of each node i in the first layer. Aik is the
linguistic term of input xk , including short, medium, or long. aik , bik , and
cik are the premise parameters representing the actual shapes of the
membership function. In the second layer, i.e. the product layer, every
node is a fixed node labelled П, shown as a circle. The output of this
layer, O2,i , equals wi , which is the product of all incoming signals, rep­
resenting the weightage of each rule to be fired in each node i through
the multiplication calculation in Equation (3). In the third layer, i.e. the
normalisation layer, every node is a fixed node labelled N, shown as a
circle. The output of this layer, O3,i , is the normalized weighting wi ,
which calculates the ratio of the ith rule’s firing strength to the sum of all
rules’ firing strengths using Equation (4). In the fourth layer, i.e. the
defuzzification layer, the nodes are presented as squares. Every node i in
this layer is an adaptive node with a node function. By multiplying the
results in layer three with the Sugeno fuzzy rules using Equation (5), the
parameters in this layer are referred to as consequent parameters. In the
fifth layer, i.e. the summation layer, the single node is a fixed node
∑
labelled, , shown as a circle. It computes the overall output as the
summation of all incoming signals using Equation (6).

If x1 is A11 , and, x2 is A12 , and, …, xk is Aik , then f1 = p11 x1 + p12 x2 + … 1

O1,i = μAi (xk ) = ⃒ ⃒2bi ∀i ∈ N (2)
⃒x− ci ⃒
+ pik xk + s1 (1) 1 + ⃒ ai ⃒

As an example of an ANFIS model with k inputs (xk ) and one output ∏

(f), Fig. 3 shows the design of a five-layer ANFIS architecture. The O2,i = wi = μAi (xk )∀i ∈ N, k ∈ K (3)
structure of each ANFIS layer is as follows (Koç and Şener, 2021; Jang,
wi
1996; Leung et al., 2019). In the first layer, i.e. the fuzzification layer, O3,i = wi = ∑ ∀i ∈ N (4)
wi

Table 1 ∑
O4,i = wi fi = wi pik xk + si ∀i ∈ N (5)
Notation table of ANFIS.
Notation Definition ∑ ∑
wi fi
O5,i = f = wi fi = ∑ ∀i ∈ N (6)
xk Input variable, k ∈ K wi
f Output variable
fi Output of consequent parameter i, i ∈ N when the premise parameter values are fixed, the overall output can be
Oj,i Output of the ith node in the jth layer, i ∈ N, j ∈ J
expressed as a linear combination of consequent parameters, as shown
aik , bik , cik Premise parameters sets of variables xk where aik is the lower limit, bik is
the upper limit and cik is the central value, i ∈ N, k ∈ K in Equation (7).
pik Linear consequent parameters set of variables xk , i ∈ N, k ∈ K ∑
si Constant variable of linear consequent parameter f= wi fi = w1 p11 x1 + w1 p12 x2 + … + w1 pik xk + w1 s1 + … + wn pn1 x1
Aik Fuzzy set of input variables xk , i ∈ N, k ∈ K
+ wn pn2 x2 + … + wn pnk xk + wn sn
μAi (xk ) Membership function of the fuzzy set of input xk , i ∈ N, k ∈ K
wi Weighting of the rule in ith node of layer 2, i ∈ N (7)
wi Normalized weighting of the rule in ith node of layer 3, i ∈ N

5
H.Y. Lam et al.
To enhance the performance of the ANFIS model, a hybrid learning
algorithm was adopted to calculate the premise and the consequent
parameters of ANFIS. The hybrid learning algorithm consists of forward
and backward passes. For the forward pass, the premise parameters aik ,
bik , and cik were set as constants. The node outputs move forward from
the fuzzification layer to the defuzzification layer, and the consequent
parameters pik , si are optimised using the least squares method. The
backward pass then starts with error signals propagating backward
through the gradient descent method to search for the local minimum of
the premise parameters (Jang, 1996). The process continues until the
optimal parameters are obtained or the maximum number of epochs is
reached. With its high learning capability, a solution can be obtained
using a fuzzy reasoning function, and fuzzy rules can be auto-created
without expert knowledge and experience. Therefore, users must only
determine the input and output variables, proportion of training and
testing data, type of membership function, number of membership
functions, and training epochs to obtain the optimal output. The EQPM
output is the predicted order quantity of each SKU, which indicates each
SKU amount to be replenished in the pick-face forward area for order
picking in the next time interval.
3.3. Module 3: selective stock allocation module (SSAM)
Owing to the limited space, it is usually unable to allocate all types of
SKU and the predicted quantity to the pick-face forward areas. This
module aims to determine which types of SKU and their corresponding
quantities are allocated to the pick-face forward areas based on the
predicted quantity of each SKU type for the next time interval. The
notations for the parameters and decision variables in Table 2 describe
the problem of allocating the types of SKU and their corresponding
quantities to the pick-face forward areas. Considering the DC-handling n
types of SKU, all its products are currently stored in m upper-deck
reserve areas.
To save time in order picking, certain types of SKUs are pre-allocated
to f pick-face forward areas such that the picker can pick the required
quantity of SKUs directly from the pick-face forward areas without
Table 2
Notation of parameters and decision variables in SSAM.
Parameters
N = {1, 2, …, Index for SKU
n}
M = {1, 2, …, Index for upper-deck reserve area
m}
F = {1, 2, …, Index for pick-face forward area
f}
QPi Predicted quantity of SKU i, ∀i ∈ N
QRij Available quantity of SKU i in upper-deck reserve area j, ∀i ∈ N,∀j ∈
M
tik Per unit picking time required for picking SKU i from pick-face
forward area k, ∀i ∈ N, ∀k ∈ F
tijD Per unit picking time required for direct picking of SKU i from
upper-deck reserve area j, ∀i ∈ N, ∀j ∈ M
Vijk Volume of SKU i to be replenished from upper-deck reserve area j to
pick-face forward area k , ∀i ∈ N, ∀j ∈ M, ∀k ∈ F
TVk Total volume of the pick-face forward area k , ∀k ∈ F
αi Adjustment index of prediction error for SKU i, ∀i ∈ N
Adjustment index of multiple picking locations for SKU i, ∀i ∈ N
βi
εi Prediction error of SKU i, ∀i ∈ N
εi Average prediction error of SKU i, ∀i ∈ N
Decision variables
xijk = 1 if SKU i is selected for loading from upper-deck reserve area j to
pick-face forward area k
= 0 otherwise, ∀i ∈ N, ∀j ∈ M, ∀k ∈ F
yij = 1 if SKU i is picked directly from upper-deck reserve area j
= 0 otherwise, ∀i ∈ N, ∀j ∈ M
Qijk The quantity of SKU i to be replenished from upper-deck reserve
area j to pick-face forward area k, ∀i ∈ N, ∀j ∈ M, ∀k ∈ F
QDij The quantity of SKU i to be picked directly from upper-deck reserve
area j, ∀i ∈ N, ∀j ∈ M
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International Journal of Production Economics 264 (2023) 108976
requiring forklifts. Following assumptions were made to simplify this
model: (i) the quantity of SKUs in stock is sufficient to fulfil the predicted
demand; (ii) the forklifts are reserved and available to pick up SKUs from
the upper-deck reserve area at any time; (iii) the picking time for each
SKU is the same regardless of its size.
∑∑∑(( ) )
Min tik Qijk xijk × αi + tijD QDij yij × βi (8)
i∈N j∈M k∈F
Equation (8) is the objective function with the aim of minimising the
total picking time. The first part of the objective function in equation (8)
concerns the picking time when SKU i is selected for loading the upper-
deck reserve area j to pick-face forward area k. To pick the required
quantity from the pick-face forward area k, per unit time tik is required.
The second part of equation (8) considers the picking time to pick SKU i
with quantity QDij directly from the upper-deck reserve area j. If the
quantity replenished in the pick-face forward area k is insufficient to
meet the predicted quantity, the picker will need to spend more time
picking SKU i directly from the upper-deck reserve area j. Considering
the impact of other factors that may affect the replenishment plan, two
adjustment indices αi and βi are added in equation (8). Since the pre­
dicted quantity of SKU i is obtained from the ANFIS model results,
prediction errors may occur. The actual quantity of SKU i may be higher
or lower than the predicted value. It is preferable to select the same SKU
in a single location, such as upper-deck reserve area j or pick-face for­
ward area k. Hence, as shown in equation (9), an adjustment index αi is
defined to divide the prediction error between the predicted and actual
quantities of SKU i in the previous time interval, εi , by the average error
prediction error of SKU i obtained in the ANFIS model, εi , to provide
priority to allocate the SKU with the smaller predicted error to the pick-
face forward areas. On the other hand, another adjustment index βi
considers the complexity of the picking operations. It is preferable to
pick the same SKU in a single location, either all in the upper-deck
reserve area j or the pick-face forward area k. Hence, βi , calculated
using equation (10), provides a longer picking time if SKU i is selected
from multiple locations.
Prediction error of SKU i in the previous time interval, εi
αi = (9)
Average prediction error of SKU i, εi
∑∑
βi = xijk (10)
j∈M k∈F
The stock allocation problem is subject to the following constraints:
∑∑( )
xijk Qijk + yij QDij ≥ QPi for∀i ∈ N (11)
j∈M k∈F
∑( )
xijk Qijk + yij QDij ≤ QRij for∀i ∈ N, ∀j ∈ M (12)
k∈F
∑∑
xijk Vijk ≤ TVk for∀k ∈ F (13)
i∈N j∈M
∑
xijk ≤ 1 for∀i ∈ N, ∀j ∈ M (14)
k∈F
where xijk , yij = 0 or 1; Qijk , QDij ≥ 0. Constraint in Equation (11) ensures
that the total quantity of each SKU picked from the upper-deck j and
pick-face forward area k should be sufficiently large to fulfil the pre­
dicted quantity of SKU i. Constraint in Equation (12) limits the sum of
the total quantity of SKU i to be replenished to the pick-face forward
area k and the total quantity to be picked from the upper-deck reserve
area j should not exceed the available quantity of SKU i in the upper-
deck reserve area j. Constraint in Equation (13) checks the volume ca­
pacity of pick-face forward area k. This ensures that the total volume of
the SKU i to be replenished does not exceed the maximum volume ca­
pacity of the pick-face forward area, k. The constraint in Equation (14)
H.Y. Lam et al.
limits SKU i from being loaded from the upper-deck reserve area j to one
pick-face forward area only.
4. Illustrative case scenario
To validate the feasibility and performance of the RPFR system, a
pilot case study was conducted in a medium-sized third-party logistics
distribution centre in Hong Kong. The case company has a 3000 m2
distribution centre with over 30 aisles for processing e-commerce or­
ders, such as red wines, powders, coffee beans, and electronic parts.
Currently, the company stores e-commerce SKUs using high-bay pallet
racking, as shown in Fig. 4, and single order picking is applied. Once the
company receives an e-order from customers, those data are then
aggregated and sent to the warehouse management system, which al­
lows the pickers to check the stock level. Based on the SKUs’ locations,
pickers use forklift trucks to pick the SKU in pieces one by one from
different racks. However, owing to the influence of COVID-19,
increasing orders were received from online shopping instead of
selling daily necessities or other commodities in brick-and-mortar
stores. In this situation, increasing small-lot orders came to the DC
with fluctuating demands in the e-commerce business. Therefore, it was
difficult to manage the DC, especially for the order-picking process. To
address the above-mentioned challenge, the company decided to apply
the proposed RPFR system and set up two aisles for implementing the
pick-face strategies. A prototype of the proposed RPFR system was then
designed using MATLAB to illustrate the deployment of EQPM and
SSAM in the case scenario.
4.1. Deployment of E-order quantity prediction module (EQPM)
To predict the order quantities of each SKU in the next time interval
and make the decision on pick-face replenishment, input variables that
may affect the order quantities were first identified. The relevant data of
Fig. 4. The layout of a company warehouse.
7
International Journal of Production Economics 264 (2023) 108976
the input and output variables were then extracted to build the ANFIS
model.
Step 1. Identify the input and output variables
To predict the customer demand on SKU quantities, factors including
past sales quantities (xpast ), price (xprice ), discount rate (xdicsount ), and
holidays (xholidays ) are identified as the input variables. “xpast ” refers to
the historical sales records of different SKUs. “xprice ” refers to the list
price of the SKUs displayed on an online shopping website. Price is a
significant factor that could affect the demand and sales volume of each
SKU. If the price increases, the sales of SKU might decrease. In contrast,
the sales of an SKU may increase during the price reduction or the
promotional period. “xdicsount ” refers to the discount offers on different
wines under a certain period. Customers may be attracted to discounts
and place orders within the discount offer period. In this situation, the
increased discount rate may increase the sales volume and lead to an
increase in the quantity of outbound wines. “xholidays ” refers to the
number of holidays during the next pick-face replenishment period.
Sales volume is expected to increase, especially during festivals. Sales
are also expected to increase during the long holiday seasons. Addi­
tionally, the output variable “fpredict ” of the ANFIS model is the predicted
quantity of each SKU for the following three days. The predicted
quantity is one of the considerations for the GA-based item allocation
model.
Step 2. Extract relevant data
After identifying the input and output variables, the relevant data
must be extracted to train the ANFIS model. To develop the proposed
ANFIS model, a 208-size dataset was selected and grouped into training
and testing data. Ten types of SKUs were selected, and the selected data
contained a two-year sales record for each SKU. To clean, edit, and
classify various data from the database, a data pre-processing step was
performed.
Step 3. Design the structure of the ANFIS model
An ANFIS model with four inputs and one output was constructed
using MATLAB to test for the best parameter settings. To train the model,
the collected data was divided into training and test datasets. A pro­
portion of the collected data is classified as the training dataset to train
and build the ANFIS network, whereas the remaining data are classified
as testing datasets to validate the prediction performance. Table 3 lists
the training parameters for developing the optimal ANFIS model,
including the FIS structure, number of membership functions, type of
membership function, output function, and number of epochs. For input
variables, three types of membership functions (MFs) (triangular, trap­
ezoidal, and generalised bell) and different numbers of MFs for each
input (2/3/4) are considered. Subsequently, the type of output function
(i.e. constant) is defined. Different epochs (20/50/100) were used for
training. To reduce the overfitting and selection bias problems of ANFIS,
10-fold cross-validations were conducted for each setting. Based on the
Table 3
Training parameters of the ANFIS model.
Parameters Setting
Number of layers 5
Number of input variables 4 (xpast ; xprice ; xdicsount ; xholidays )
Number of output variable 1 (fpredict )
Type of SKUs 10
Total number of data set per SKU 208 (52 × 2 × 2)a
Proportions of training data to testing data 70:30/80:20
FIS structure Grid partition
Type of input MFs Trimf/Tramf/Gbellmf
Number of MFs for each input 2/3/4
Number of epochs 20/50/100
a
The 208 data set per SKU are collected in 2-year record with replenishments
made twice per week.
H.Y. Lam et al. International Journal of Production Economics 264 (2023) 108976

Table 4
Average training and testing error under different parameter settings.
Test No. No. Of MFs Type of Input MF Average RMSE Test No. No. Of MFs Type of Input MF Average RMSE

Training Testing Training Testing

Training-Testing Ratio: 70:30 Training-Testing Ratio: 80:20

1 3-3-3-2 trimf 9.27 18.81 13 3-3-3-2 trimf 9.74 16.18
2 trapmf 11.25 25.38 14 trapmf 11.65 22.84
3 gbellmf 9.70 22.46 15 gbellmf 10.20 18.48
4 3-3-3-3 trimf 7.85 28.69 16 3-3-3-3 trimf 8.49 21.79
5 trapmf 8.95 31.42 17 trapmf 9.34 23.71
6 gbellmf 7.60 72.45 18 gbellmf 8.24 51.36
7 4-4-3-3 trimf 5.57 95.51 19 4-4-3-3 trimf 6.45 62.08
8 trapmf 7.84 67.17 20 trapmf 8.47 46.96
9 gbellmf 5.56 129.75 21 gbellmf 6.37 104.15
10 4-4-4-4 trimf 3.88 91.71 22 4-4-4-4 trimf 4.57 80.88
11 trapmf 7.67 93.38 23 trapmf 8.31 62.18
12 gbellmf 3.81 141.20 24 gbellmf 4.47 115.34

above results, the optimal ANFIS model, shown in Fig. 5, was applied to
forecast the demand for SKU quantities based on the minimal training
errors of the ANFIS model.
4.2. Deployment of selective stock allocation module (SSAM)
After predicting the order quantity of each SKU in the next time in­
terval, the GA model is designed in SSAM to determine the types of SKU
and their corresponding quantities to be allocated to the pick-face for­
ward areas. Owing to the limited size of the pick-face forward areas, it is
usually impossible to load all SKUs onto the pick-face forward areas with
the predicted quantity. Hence, the GA is used to solve for the nearly
optimal allocation plan solution based on the model discussed in Section
3.3. The proposed GA goes through the process of chromosome encod­
ing, fitness function evaluation, crossover, and mutation, as shown in
Fig. 6.
The GA process begins with chromosome encoding. Fig. 7 shows an
example of an encoded chromosome for this problem. The chromosome
is divided into four parts: (i) the pick-face SKU loading region; (ii) the
pick-face quantity replenishment region; (iii) the upper deck SKU
picking region; and (iv) the upper deck quantity picking region. For the
pick-face SKU loading region and upper deck SKU picking region, a bi­
nary number is used to indicate whether the type of SKU is loaded to the
pick-face forward area, xijk , and picked in the upper-deck reserve area,
yij . For the pick-face quantity replenishment region and upper-deck
quantity picking region, integer numbers are used to indicate the
quantity to be picked in pick-face forward area Qijk and upper-deck
reserve area QDij . The length of the chromosome was 2 × n × m × k + 2 ×
n × m in terms of the number of genes.
Chromosomes in the parent pool were randomly generated to create
offspring in the mating pool. The fitness function based on Equation (7)
was used to evaluate the performance of each chromosome. The pre­
diction error of the developed ANFIS model for each SKU was extracted
to calculate the fitness value. A chromosome with a lower fitness value
would have a higher chance of being selected for offspring reproduction.
In the mating pool, crossover and mutation were conducted for each
chromosomal pair to generate new offspring with a new allocation plan.
Offspring with better performance would then replace the worst chro­
mosome in the mating pool, so that the fitness function value improves
during iterations. The GA iteration process continues until the termi­
nation criterion, i.e., the maximum number of iterations, has been met.
Fig. 8 shows an illustration of the GA mechanism for SKU allocation.
This shows that 55 units of SKU number 3 should be picked directly from
upper-deck reserve area 1, while 10 units should be allocated to pick-
face forward area 2.
5. Results and discussion
To further evaluate the performance of the proposed models, two
comparative analyses were conducted: (i) comparative analysis of the

Fig. 5. Membership function structure of the optimal ANFIS model.

8
H.Y. Lam et al. International Journal of Production Economics 264 (2023) 108976

Fig. 6. Pseudocode for genetic algorithm.

Fig. 7. Chromosome encoding.

Fig. 8. GA mechanism for SKU allocation.

ANFIS parameter settings; (ii) comparative analysis of the GA results.
The implications of this study are presented in this section.
5.1. Comparative analysis of ANFIS parameter settings
5.1.1. K-fold cross validation
Based on the parameter settings with 80% training data and 20%
testing data proportion, 3-3-3-2 sets of membership functions, and
triangular types of membership functions, k-fold cross-validation was
conducted to avoid selection bias and model overfitting. By setting k =
10, the original dataset for each type of wine was randomly divided into
ten sub-datasets to test the model prediction performance. For each type
of wine, nine subdatasets were selected as the training data in each
iteration, while the remaining subset was used as the testing data. The
iteration continued ten times, represented by k-1, k-2, k-3, …, k-10, until
every subset was selected as the testing data once. After conducting 10-
fold cross-validation, the average k-fold cross-validation training and
testing errors were analysed using Equation (15). Fig. 9 shows the dis­
tribution of the 10-fold cross-validation results of the selected SKUs
under the defined parameter setting. The variances of the 10-fold cross-

9
H.Y. Lam et al. International Journal of Production Economics 264 (2023) 108976

Fig. 9. Distribution of the 10-fold cross-validation result of selected SKUs.

validation of each SKU ranged from 0.0425 to 0.265. The results show
Table 5
that there was no bias in the prediction performance of the trained
Average training and testing error based on different parameter settings.
model.
Parameters Overall Average RMSE
1∑ k
Cross validation error(k) = Error(i) for k = 1, …, 10 (15) Training error Testing error
k i=1
(i) Proportions of training data to testing data sets
70%:30% 7.41 68.16
5.1.2. Comparative analysis of ANFIS parameter settings 80%:20% 8.02 52.16
In addition to k-fold cross-valuation for each SKU, a comparative (ii) Numbers of MFs for each input (Based on 80% training data to 20% testing data)
3-3-3-2 10.53 19.17
analysis was conducted to examine the optimal parameter settings of the
3-3-3-3 8.69 32.29
ANFIS model. Three parameter settings that may affect the training and 4-4-3-3 7.10 71.06
testing errors were considered under the same training epochs: (i) pro­ 4-4-4-4 5.78 86.13
portions of training and testing datasets; (ii) number of membership (iii) Type of input MFs (Based on 80% training data and 20% testing data and 3-3-3-2
set of membership functions)
functions for each input variable; and (iii) type of membership functions
trimf 9.74 16.18
for each input variable. Hence, 24 × 10 × 10 experiments were designed Tramf 11.65 22.84
for ten SKUs, each with 24 sets of experiments and were repeated ten gbellmf 10.20 18.48
times to estimate the prediction error and to ensure that the model was
suitable for prediction. The root-mean-square error (RMSE) was used to
measure the SKU quantity prediction performance. Table 4 lists the 52.16% and 68.16%, respectively, with the error reduction of 23.5%.
experimental results of the average training and testing errors under Although the training error was smaller for 70% training data, its testing
different parameter settings. error was comparatively high, indicating overfitting.
Using different combinations of ANFIS parameter settings, as speci­
fied in Table 4, t the setting with an 80:20 training-to-testing ratio, a 3-3- (ii) Changing the numbers of MFs for each input
3-2 set of membership functions, and a triangular type of MFs provided
an optimal ANFIS model setting. The difference between the average Four sets of membership functions were considered in the case study:
training and testing RMSEs was the smallest, indicating that the above 3-3-3-2, 3-3-3-3, 4-4-3-3, and 4-4-4-4. The numbers represent the
setting could provide the best prediction performance among all set­ number of membership functions used for each input attribute. If the
tings. For the other settings, although test 12 demonstrated the lowest first number is “3”, then there are three membership functions, e.g.,
average RMSE (3.81), its average testing RMSE was extremely high (i.e. high, medium, and low, defined for input variable one. In the experi­
141.2), demonstrating the problem of overfitting; hence, this setting was ments with 80% training data and 20% testing data, a smaller testing
not acceptable. error was obtained with fewer membership function sets for each
attribute, possibly leading to better prediction results. For instance, the
5.1.3. Key findings on ANFIS parameter settings average testing errors for membership functions 3-3-3-2 and 4-4-4-4
Table 5 summarises the average training and testing errors for ten were 19.17 and 86.13, respectively. The testing error was reduced by
SKUs based on different ANFIS parameter settings. Three key findings 77.7% when fewer membership functions were used. The results
were established in the experiments to select the best ANFIS model for demonstrate that fewer membership functions for each input attribute
predicting the future order quantities. outperformed other settings.

(i) Adjustment on the proportions of training to testing data sets (iii) Changing the type of input MFs

Two proportions were considered in the study: 70% dataset for
training, with the remaining 30% as testing data; and 80% dataset for
training, with the remaining 20% as testing data. By changing the pro­
portions of training data, it was found that 80% training data and 20%
testing data exhibited a lower testing error compared with 70% training
data and 30% testing data. The average testing error was found as
Triangular (trimf), trapezoid (tramf), and bell (gbellmf) membership
functions were tested for the ANFIS model. The results showed that the
triangular membership function exhibited the lowest testing error
(16.18) compared with the trapezoid (22.84) and bell (18.48) mem­
bership functions. While the trapezoid membership function performed
better on some wines, the triangular type exhibited a stable testing error

10
H.Y. Lam et al.
for the majority of SKU quantity predictions.
5.2. Comparative analysis of GA results
The proposed GA model considers two adjustment factors: the pre­
diction error of the ANFIS model on the SKU quantity and the
complexity of picking the same SKU in multiple locations. In this section,
a comparative analysis is conducted to discuss the results with and
without considering the two adjustment factors. Experiments were
performed using a GA setting with a population size of 500, 0.9 cross­
over rate, 0.01 mutation rate, and 10,000 generations.
Based on the experiments with two upper-deck reserve areas, two
pick-face forward areas, and ten SKUs, Fig. 10 shows a comparison of the
number of SKU allocating locations under different scenarios: (i) the
proposed GA, (ii) the prediction error of the SKU quantity is ignored, and
(iii) multiple pickup locations are allowed. For scenario (i), wherein
multiple pickup locations are allowed, no restriction is imposed on the
number of allocated locations. The same SKU can be loaded from the
upper-deck reserve area onto any pick-face forward area. The GA results
show that the same SKU would be allocated to 4–6 different locations,
which is comparatively higher than the number of allocated locations in
the other two scenarios. In this case, pickers must consolidate a suffi­
cient quantity of SKUs from different locations after picking, which
creates inconvenience in order processing. For scenario (ii), where the
prediction error of the SKU quantity is ignored, its performance is found
to be similar to that of the proposed GA (iii), wherein pickers must pick
the SKUs from one or two locations.
However, scenario (ii) does not guarantee that an SKU with a low
prediction error can be allocated to the pick-face forward area. Since the
impact of a high prediction error is ignored, the SKUs allocated to the
pick-face forward area in this model may have a high prediction error,
such that variations in the order quantity may occur. For the proposed
GA (iii), both adjustment factors were considered to minimise the
impact of the picking operations in different locations and reduce the
impact of a large prediction error. Fig. 11 shows the percentage of SKU
with a low prediction error (≤1) to be allocated to the pick-face forward
area based on scenarios (ii) and (iii). To prioritise SKUs with low pre­
diction errors in the pick-face forward area, the number of SKUs allo­
cated to the pick-face forward areas is divided into two categories with
prediction errors (a) smaller than or equal to 1 and (b) larger than 1. The
results show that with a 100% guarantee, SKUs with a prediction error
smaller than or equal to 1 can be allocated to the pick-face forward areas
if 30 types of SKUs or below are considered using the proposed GA. This
percentage drops gradually if over 30 types of SKUs are considered. In
scenario (ii), wherein the prediction error is ignored, 80% SKUs allo­
cated to the pick-face forward areas have a prediction error smaller than
or equal to 1, and the percentage drops when the number of SKUs in­
creases. Based on the experimental results, the performance of the
proposed GA is summarized by considering adjustment factors, i.e.
Fig. 10. Comparison on the number of picking locations under different scenarios.
11
International Journal of Production Economics 264 (2023) 108976
prediction error and picking complexity, outperforming other
approaches.
5.3. Advantages of the RPFR system
After implementing the RPFR system for two months, the operation
efficiency for order picking in DC was improved while the staff satis­
faction was enhanced in the case company. On average, the case com­
pany received 150 e-commerce orders per day. Table 6 shows the
performance improvement in order picking before and after the imple­
mentation of the RPFR system. Three key indicators are used to measure
the operational performance, including (i) time for order picking pro­
cess, (ii) times for the insufficient quantity of SKUs in pick-face forward
areas, and (iii) times for missing SKUs in the pick-face forward area.
Conventionally, SKUs are stored in the pallet level and the picker
picks one order at a time from different rack locations. In contrast, by
using the RPFR system, the pickers can directly perform piece picking at
the desired pick-face forward area without moving the SKUs from upper-
deck reserve area. As the replenishment activities from upper-deck
reserve areas to pick-face forward area are usually conducted between
each pick wave, the time for the upper-deck reserve areas is reduced to
zero. Therefore, the RPFR system can reduce the average time for order
picking process in terms of travelling and picking time by 63.28% (from
12.1 to 4.5 min). However, when adopting the RPFR system, only the
popular SKUs will be per-loaded in the pick-face forward area. There is a
chance to miss unpopular SKUs and allocate insufficient quantity of
SKUs in the pick-face forward area. From Tables 6, it was found that the
number of times for the insufficient quantity of SKUs and the number of
times for missing SKUs in pick-face forward area per week are 0.87 and
0.72, respectively. After consulting the opinions from warehouse man­
agers, the prediction error of the RPFR system falls within the acceptable
range. In general, the proposed RPFR system can shorten the time of the
order picking operation to ensure timely delivery and hence, improve
the overall warehouse operation performance.
5.4. Implications
Unlike conventional business models, nowadays, e-commerce orders
usually consist of large item varieties in small quantities, with unstable
and uncertain daily demand with tight delivery schedules. With diverse
requirements from customers in e-commerce, DCs always face the
operational challenge of handling massive time-critical picking orders
requiring high flexibility in processing capacities to meet specific re­
quirements. These order patterns impose significant pressure on oper­
ational efficiency, especially in order-picking operations.
• Theoretically, the traditional layout with pallet storage in high racks
is no longer suitable for e-commerce warehouse operations (Bahrami
et al., 2019; Boysen et al., 2019; Yu et al., 2017). This study
H.Y. Lam et al. International Journal of Production Economics 264 (2023) 108976

Fig. 11. Comparison of the number of SKUs with low prediction error allocated to the pick-face forward areas.

raises concerns about effective resource allocation to avoid long

Table 6
waiting times due to equipment shortages. The proposed responsive
Performance improvement before and after the use of the RPFR system.
pick-face replenishment strategy allows the top management to have
Before the After the Difference better resource allocation on human resource, equipment scheduling
use of RPFR use of the (%)
and storage location assignment. By doing so, the replenishment
RPFR
activities in the pick-face forward areas can be arranged in advanced,
Average time for the order picking 12.1 min 4.5 min − 63.28%
prior to the order arrivals in the next pick wave.
process (per order)
Time for picking the SKU from the 7.2 min 1.3 min − 81.19%
• From a practical perspective, this study provides a practical solution
high-bay pallet racking to formulate a pick-face replenishment strategy for e-commerce
- Time for the upper-deck reserve 4.1 min 0 min fulfilment. ANFIS and GA are designed to predict the future demand
areas and allocate selected SKUs to the pick-face forward areas for timely
order fulfilment to support the DC in handling e-orders. Hence, DCs
- Time for the bottom pick-face 3.1 min 1.3 min
forward areas can shorten the order-picking time to ensure timely delivery and
hence, improve the overall warehouse operation performance. Ulti­
Time for travelling to different racks 4.9 min 3.2 min − 34.69% mately, customer reputation and satisfaction can be enhanced to
Number of times for the insufficient N/A 0.87 / maintain long-term relationships.
quantity of SKUs in the pick-face
forward area (per week)
• Apart from managerial and practical perspectives, this study high­
Number of times for missing SKUs in N/A 0.72 / lights economic advantages of the proposed responsive pick-face
the pick-face forward area (per replenishment strategy, especially for DCs with a high ceiling and
week) high-bay racks. In some countries or areas that are densely popu­
lated, such as Hong Kong, DCs are generally set up inside factory
buildings with small floor size and high ceiling. To fully utilise the
integrates machine learning and artificial intelligence, i.e. ANFIS and
storage capacity, high-bay racks are usually set up to store pallet-
GA, for order demand prediction and stock allocation, respectively.
based SKUs. However, the frequent movement of SKUs from and to
To the best of our knowledge, this is the first study to consider the
the high-bay racks affects the e-order handling effectiveness and
manual replenishment activities in the forward-reserve areas by
prolongs the e-fulfilment lead time, which further increases the
integrating these two techniques. Hence, the research gap is filled by
operational cost. The proposed responsive pick-face replenishment
modelling and predicting the SKU demand for upcoming e-commerce
orders using ANFIS, thereby addressing the problem of picker strategy provides an efficient and cost-effective approach to facilitate
the order picking process, even though the DCs are equipped with
blocking. The predicted result is further used in the GA model to
formulate the allocation plan capable of dealing with the high-bay racks. Furthermore, due to an increase in the order picking
efficiency, DCs can deliver e-commerce orders to customers on time
limited-sized constraint of the pick-face forward areas.
• From the managerial perspective, changing from brick-to-mortar to to avoid delays and perform cost saving in terms of (i) average
penalty incurred due to late delivery and waste of transportation cost
e-commerce orders enables logistics practitioners to manage the
orders in the e-commerce DCs. Meanwhile, manual picking is still the and (ii) average compensation to customers. Expectedly, the total
cost saved per year is as follows and the improvement is highlight in
dominant practice in the industry to reduce the huge investment cost
for both technology and infrastructure. Although orders with similar Table 7:
items can be grouped and picked simultaneously, pickers need
considerable time to pick items located on the upper deck of the HK$ [(average penalty per month before implementation – average
penalty per month after implementation)] + [(average compensation
storage rack. Moreover, the pickers should use a forklift truck to load
the whole pallet to the ground, pick only one or two pieces of the spent to customers per month before implementation – average
compensation spent to customers per month after implementation)] ×
items on the pallet, and then put the whole pallet back to its original
position. It not only creates complexity in order picking but also 12

12
H.Y. Lam et al.
Table 7
Cost saving after implementing the proposed strategy.
Before After Improvement
(%)
(i) Average penalty incurred due to $12,000 $5500 54.17%
late delivery and waste of
transportation cost (per month)
(ii) Average compensation to $56,000 $8000 85.74%
customer (per month)
Annual total cost $816,000 $162,000 80.15%
= HK$ [(12,000–5500) + (56,000–8000)] × 12
= HK$ 654,000
In the long run, as the proposed system ensures continuous
improvement in the order picking processes because of the machine
learning facture, it will not be surprising to observe continuous
improvement in cost saving in penalty and compensation spent to cus­
tomers over time. Hence, the proposed system supports the continuous
business development in the bloom of e-commerce market.
6. Conclusions
With the increasing online shopping in recent years, the expanding e-
commerce industry has not only generated new business opportunities
but has also led to an increased pressure on DCs regarding e-order
fulfilment. Considering the complexity of handling numerous small-lot-
sized e-commerce orders in a competitive logistics business environ­
ment, this study proposes a responsive pick-face replenishment strategy
for enhancing the order-picking process and further improving the
operational efficiency in DC. To address the challenges of fast order
delivery, the proposed RPFR system integrates a machine learning
forecasting model based on ANFIS and an artificial intelligence model
with GA to predict the upcoming e-order quantities of each SKU item
and to allocate a subset of selected SKUs from the upper-deck reserve
areas to the bottom pick-face forward areas. Based on the predicted
order quantity of each SKU, GA is used to optimise the stock allocation
plan by considering two adjustment factors: the prediction error of the
ANFIS model on the SKU quantity and the complexity of picking the
same SKU in multiple locations. Three comparative analyses were con­
ducted to validate the results through k-fold cross-validation, prediction
performance evaluation, and allocation performance of the GA.
The originality of this study is summarized as follows. This paper
addresses an important research and operational needs of small-lot-sized
e-commerce order picking problem, specifically for DCs with a high
ceiling and high-bay racks. From the past literature, most studies
examined pick-face replenishment problem in a machine-supported way
and solved it as an SKU switching problem. The problem of picker
blocking and long waiting time has been raised as it took time for the
retrieval systems to switch SKUs between the storage racks and picking
areas in a real-time manner. Concerning the importance of time-critical
delivery in the e-commerce environment, previous studies lack the
consideration of predicting SKUs demand in upcoming e-commerce or­
ders and pre-allocating the selected SKUs to the bottom pick-face for­
ward areas, so as to ensure a fast and efficient retrieval of SKUs from
shelves under a tight schedule. This paper fills this research gap by
presenting a novel data-driven methodology which integrates a pre­
dictive analytics algorithm and an adaptive allocation algorithm,
thereby addressing the problem of picker blocking, fluctuating order
demand and limited size of the pick-face forward areas.
This study has two limitations. First, this study assumes that the
quantity of SKUs in stock is sufficient to fulfil the predicted demand to
simplify the case scenario. However, this may not be the case when the
number of e-orders increases suddenly, as the DC may not have enough
inventory to fulfil the demand. Future research will focus on examining
the effect of insufficient inventory on e-order fulfilment when
13
International Journal of Production Economics 264 (2023) 108976
developing an optimisation model considering the penalty parameters.
Second, the proposed methodology was applied to a DC with random
storage. SKUs were allocated to any pick-face forward area according to
the generated allocation plan in the case study only. However, different
layouts (e.g. dedicated storage and class-based storage) and different
picking strategies (e.g. single/batch order picking, wave picking and
robotic picking) in DC will also affect the system performance. Future
research directions are expected to consider different DC designs, lay­
outs and picking strategies, such as zoning and inventory classification,
so that frequent items may be prioritized for allocation to the pick-face
forward areas near the entrance. More comprehensive analyses can be
conducted to further evaluate the system’s performance.
Declaration of competing interest
No potential conflict of interest was reported by the author.
Data availability
No data was used for the research described in the article.
Acknowledgements
This project was supported by the Research Grants Council of Hong
Kong, University Grants Committee [UGC/FDS14/E06/21], and the Big
Data Intelligence Centre in The Hang Seng University of Hong Kong.
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