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Introduction to Warehousing
Chen Zhouczhou@isye.gatech.edu
School of ISyEFall, 2008
What is a warehouse
Warehouse: “a structure or room for the storage of merchandise or commodities” – Merriam-WebsterDistribution center (DC): flow through or cross docking centricReasons to have warehouse
Mostly discussed in inventory section
Reason to have DCsTransportation consolidationProduct positioningBreak balk…
In house warehouse or DC is normally a cost center
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References
Text BCh 1, 2, IntroCh 3 operationsCh 5 equipmentCh 6 – 6.2 COI, terrainCh 7, to page 63 order picking
Follow llink Warehouse & Distribution Science
Some functions of a distribution center (DC)
A structure that receives and distributesmerchandise or commodities.
Important element in supply chainConsolidationReduce wait time…
DC
From Factories
To Stores
X-dock
1 2 m
1 2 n
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Birdeye view: a X-dock and a DC In US (survey by SCL and Logistics Resources)
> 300,000 large warehouse or DCs2.5 million employeesCost > 5% of the Gross National ProductTLI survey of ~ 150 companies, median
Size: 150,000 ft2 (2.6 football fields)Height: 28 ft15 dock doors60 FTE564,000 lines/year, 60,500 orders/year, 9 lines/order5,001 skus, 3,502 activeInventory turns 5.1 Fill rate 97.1
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Examples in US
K-Mart DC: 2 mil ft2 (or about 35 football fields)Walmart
RDC at LaGrange: 1.3 mil ft2Port DC at Stateboro: 2 mil + 1.4 mil
American Cancer Society: 50,000 ft2
Examples where land is scarce
Often multi-story50,000 is considered good sizeUse high space efficiency and technology to compensate for lack of space
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Loads and handling Distribution network example: Whirlpool
Home appliancesRefrigerators, washer/driers, water heaters, microwave, etc.1500 skusRevenues > $10 bil
World wide, 39 manufacturing facilities in 13 countriesUS, 10 Factory Distribution Centers in USCustomers
Stores: Lowe’s, H H Gregg, BuildersIndividuals (< 5%)
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Whirlpool
10 Factories 10 RDCs 60 LDCs
StoresNew development Homes
Where to position inventories
Response time vs. costResponse timeCost
Land, economy of scale…Pooling effect example
1 RDC support n LDCsLDC demand iid, N(µ, σ) (not necessarily normal), CVLDC = µ /σ
nCVCVn LDC
RDCRDC == ,2σσ
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Atlanta DC
657,000 ft2 (14 football fields), 140,000 unit storageThroughput per day
Receiving 50 - 75 truckloadsShipping: 100 truckloads
Supports 7 + 1 LDCsHolds 4 weeks of inventory
KnoxvilleNashville
Atlanta
Montgomery
Jacksonville
Columbia
RaleighCharlotte
Walmart in US (2004)
~ 100,000+ merchandise skus~ 3,000 from far east, high % revenuesA lot from NAFTA countries288 bil revenue
4 port DCs: LA, Houston, Stateboro GA, James City VA50 Regional DCs (LaGrange in GA)3,000 stores and supercenters
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Supply Chain
Port To DC
Port DC
RDC
RDC
Port DC and RDC for Wal-Mart
400500People ~
100 cases/man hour45 cases/man hourProductivity15,000/hour25,000/dayThroughputSupport 85 storesSupport RDCs and storesFunction50,0003,000Skus ~
1.3 mil ft22 mil ft2 (35 football fielsds)Size
RDCPort DCMeasure
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RDC – X-dock vs. storage/pick
Response timeSystem wide inventory levelHandling cost
Port DC
LaGrange RDC
RDC
Trends
Value added services (in-sourcing)Customization (refrigerator door)Merge in transit…
ConsolidationsConveyorized merge and sortation systems
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Warehouse operation objectives
Minimize costs LaborSpace and utilitiesCapitalIT
Subject to constraintsFill rateThroughputTimely AccuracyVisibility
Which is the most important To a manager?
Operational decisions (some already in other modules)
How much stock in a DCSchedule of receiving & shipping, fleet routingWhere to put what: layoutStorage method: racks, mobile racks, floor, floor stack, …Order picking methodOrder picking equipment…
Inventory Management
SC
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Summary
Warehouses and DCs are necessary but often cost centersCan help to reduce cost and response times by
ConsolidationCoordinationValue added services
Delayed customizationMerge in transit
…
Major operational decisionsStorageOrder picking method…
Layout and Layout in Warehouse
Chen ZhouFall, 08
14
Others
RestaurantsOfficesSchools…
The problemWhere and how much space is for which activity to optimize w.r.t …
An abstract problem
Consider: assign n equal sized activities into nlocations. What is the number of possible layouts?n!
If n = 15, 1.3 trillion!There can be additional complications
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Objective of layout
Facility costSpace utilizationOperating cost…
Most direct important quantitative objective
Average (total) material flowAverage people travel distance in an airport, hospital,
⎟⎠
⎞⎜⎝
⎛∑i
iiDwf
Who does layout?
IEs or other engineers in a companyConsulting firmsIndependent consultant
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Approaches
State of the industry: Systematic layout planning (SLP, Richard Muther, 60s)Its an qualitative, greedy algorithm with improvementQuantified then computerized versions
State of the art: applying optimization tools to solve sub-problems in SLP
SLP overview
Input data and activities
Flow of materials
Activity relationship
Relationship diagram
Space requirements
Space available
Space relationship diagram
Modifying considerations
Practical limitations
Develop layout alternatives
Evaluation
SLP flow chart
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E.g.
Green Chemical plans to construct a 4,000 ft2 (50' * 80') maintenance facility located in New Jersey. It stores pipes, fittings for its own 4 plants and other plants in the area. There will be 11 activities. An excellent Jacket IE was assigned the job to design a layout for the new building. She performed quantitative analysis of flows and a survey of the current employees. She summarized the data in a relationship chart. However, she was promoted to the assistant general manager. You are hired to continue her job. Please apply SLP procedure to get alternative block layouts.
Information collected
No Activity Name
Space required
1 Fittings 5502 Valve 6003 Hi-value item 5004 Tubing 2505 Misc Supplies 8006 Floor Dry 3007 Fabrication 4008 Pack and trash 2009 Office 20010 Dock 10011 Rest rooms 75 3975
50’
80’
Dock
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Information collected
AlgorithmSelect the activity with most As.Select an activity with A to the first activity, and with most A, then Es. Put it next to first, draw 4 lines. Repeat until all placed. Improve based on visual inspection.
Value Closeness NoA Absolutely
Necessary 2
E Essentially important
5
I Important 10O Ordinary
closeness OK 12
U Unimportant
25
X Not desirable 1 Total = n(n-1)/2 55
I1 O
2 I3 O
3O3 O
3
E4
O4
O3O
3 E4
O4 O
4E4
X5
I5
O4
O4
I4
A4,6 I
4I6
I6
I7I
7E6
A4
I7
E7,8
11. Rest rooms, 75
10. Dock, 100
9. Office, 200
8. Pack and trash, 200
7. Fabrication, 400
6. Floor Dry, 300
5. Misc. Supplies, 800
4. Tubing, 250
3. Hi-value item, 500
2. Valve, 600
1. Fittings, 550
Code Reason 1 Highly similar 2 Similar 3 Related in orders 4 Movement of mtls 5 Security 6 Supervision 7 Personal convenience 8 Similar building services
O4 E
4
Space relationship diagram (Activity relomitted)
AlgorithmSelect the activity with most As.Select an activity with A to the first activity, and with most A, then Es. Put it next to first, draw 4 lines, or a coarse lineRepeat until all placed. Improve based on visual inspection.
81 10372
11 95
4
1 2
3
6
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Block diagram 1 Fitting 2 Valve 6 Dry
4 tubing 7 Fabric 8 Pack 10 Dock
9 Office
11 Rest
5 Misc 3 $$
0 10 20 30 40 50
80
70
60
50
40
30
20
10
0
Distance measurement and objective function
From where to where? CentroidsDistance metrics
Objective function, between m*n nodes
∑∑= =
=n
i
n
jijijdfz
1 1
min
221
221 )()( :Euclidean yyxxdE −+−=
|||| :rRectilinea 2121 yyxxdR −+−=
⎪⎭
⎪⎬⎫
⎪⎩
⎪⎨⎧ −−
=yx
C vyy
vxxt ||,||max :Chebychev 2121
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E.g. Rectilinear distances between centroid
A B
C D E
x y A 2 5 B 5.5 4.5 C 1.4 2.3 D 3 1.5 E 5.5 1.5
3.210
4*5.36*5.1
4.110
4*26*1
=+
=
=+
=
c
c
y
x
B C D E A 4 3.3 4.5 7 B 6.3 5.5 3 C 2.4 4.9 D 2.5
Block layout Centroids
Rectilinear distances
Equal distance contours
In Euclidean distance, what is the shape of the contour that have equal distance to the point given?
Ryyxx =−+− 221
221 )()(
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In Rectilinear distance
Think of origin, and 1st quadrant, any point (x+ y) on a line that has constant distance to origin satisfies x + y = R
Ryyxx =−+− |||| 2121
Warehouse with single receiving/shipping
Consider pallet in single command operationsI/O is at the cornerEach location
1 trip to store, 1 trip to pickxs + ys + xp + yp = constant
S/R
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Warehouse with separate shipping/receiving
xs + ys + xp + yp = constantWhere are the locations with minimum travel?Where are the others?
R S
Another example
R
S
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Warehouse with docks on single side
Consider the average distances if loads are evenly distributed among docks
From center dock = ¼ L.From corner dock = ½ L.In between?
Other situatoins
Different R/S door locationsPallet-in, carton-out
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