Minimizing Warehouse Space with a Dedicated Storage Policy

Abstract

Given the increasingly significant impact of an efficient product-location strategy on warehouses' performance from a service level and operational costs perspective, this paper presents a possible operations research-oriented solution to provide a tangible reduction of the overall required warehousing space, thereby translating the storage location assignment problem (SLAP) into a vertex colouring problem (VCP). Developing the topic of their previous work on the development of an effective multi-product slot-code optimization heuristic, the authors focused on finding a cost-effective way to solve the SLAP through a mathematical-optimization approach. The formulation validation on a real industrial case showed its high optimization potential, and benchmarking simulations displayed performances significantly close to the best theoretical case. Indeed, the optimized value results were definitively close to the SLAP lower bound calculated assuming a randomized storage policy which, distinct from the developed solution, must inevitably be supported by warehouse management system software. On the contrary, the proposed methodology relies upon a dedicated storage policy, which is easily implementable by companies of all sizes without the need for investing in expensive IT tools.