Simulation based study on storage

policies in a unit load warehouse

S.Jayakanthan
091416u
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Unit load/ Pallet

Aisle
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Storage Policies
• Main Issue: Decide how to allocate the various storage
locations of a uniform storage medium to a number of
SKU’s.

I/O
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Research Problem
Which storage policy is best to apply in a unit load warehouses
under certain situations such as: Different layout configurations,
warehouse dimensions, types of inventory and with different SKU
activity profiles.
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Aims and objectives of the research

• Analyze total travel distance traveled by the material handling

equipment, by implementing different storage policies.
• Analyze changes in picking time by implementing different
storage policies.
• Identify the best storage policy to implement in a unit load
warehouse of concern.
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Storage operations
• In Goetschalckx and Ratliff (1990) find that a storage
policy is optimal for a certain situation if it minimizes the
average time that is needed to store and retrieve an item
while satisfying the constraints placed upon the system.

Picking operations
• Within the order picking activity, Bartholdi & Hackman
(2010) have found that travelling of the order picker is
the most time consuming activity –usually estimated at
about 50%. As a result it is the most obvious candidate
for improvement.
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Types of Storage Policies

• Dedicated storage: Every SKU i gets a number of storage
locations, Ni, exclusively allocated to it. The number of
storage locations allocated to it, Ni, reflects its maximum
storage needs and it must be determined through
inventory activity profiling.
• Randomized storage: Each unit from any SKU can be
stored in any available location
• Class-based storage: SKU’s are grouped into classes. Each
class is assigned a dedicated storage area, but SKU’s within
a class are stored according to randomized storage logic.
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Storage policies vs Operational efficiency

• Van den Berg &Zijm, (1999), States travel time will be
reduces when move towards dedicated/Full-turnover
based storage
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Simulation

• Here simulation is selected as a method because this problem

is affected by more variables and from the literature it shows
that most of the researchers suggest simulation as a best tool
to analyze storage policies eg: Kristian, (2009).

• Here I have chosen Microsoft Excel and Visual basic for

applications (VBA) as a programming tool to create the
simulator

• The overall objective of the simulation will be measuring the

travel time by the material handling equipment, under
different conditions.
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Simulation Assumptions

• The warehouse size is fixed and has the capacity to store the
entire stock of the selected SKU database

• Quantities are measured in terms of pallets of in equal size

• Dispatch and receiving both occurred in full pallet loads

• Dispatch quantity and order quantity are fixed amounts and

there is no inventory shortage during the simulation period

• These SKU’s following Pereto’s 80/20 rule

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Data collection

Databases

Distance Matrix Inventory activity profile

• Layout from Finlays Cold

• Hypothetical database to
Storage
get generalized solution
• With changes in
• Following Pareto’s rule
input/output locations to
and from the racking area
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Distance Matrix (Layout)

Number of racks 10
Locations per rack 210
Total locations 2100
Aisle width 3 meters

Number of columns 35
Number of rows 6
Rack deep single
Cell width 1.5 meters
Cell height 1.4 meters
Cell deep 1.5 meters
Maximum carrying weight 750 kgs
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Layouts studied
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Inventory database
SKU’s percentage Dispatch frequency
10% of the SKU’s 1 (Each day dispatch)
Next 30 % of the SKU’s Greater than 1 and less than 7 (Within a week)
Rest of the 60% of the SKU’s Greater than 7 (Takes more than a week)

ABC classification of the inventory SKU popularity distribution

Cumulative % in the
SKU id %of % of Categor Categor 150%
range Demand demand demand y y
1 to 10 18250 50% 50% 50% A
11 to 20 6648 18% 18% B
100%
21 to 30 4536 13% 13% 31% B
31 to 40 3972 11% 11% C 50%
41 to 50 429 1% 1% C
51 to 60 499 1% 1% C
61 to 70 572 2% 2% C 0%
71 to 80 434 1% 1% C
81 to 90 390 1% 1% C 10 30 50 70 90
91 to 100 534 1% 1% 19% C
36263 100% 100% Series1
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Steps in Simulation

Create distance matrix for that particular layout

Run Inventory movement simulation

Call storage policy

Calculate cost of travel

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Inventory movement simulation

• i = the id of the simulation number.
This value will be increased by one at the end of each simulation
period. Here the value of (i) has been considered as one day.
Therefore within a loop of (i) the actions have been considered as
inventory activities within a day.

• Sku = the id of the sku

Each sku’s will be considered separately to find out whether it
reached a re-order level and scheduled dispatches.

• AvaiQty = Available quantity of that particular sku on that particular day

• DisQty = Dispatching quantity of that particular sku

• OrdQty = ordering quantity of that particular sku

• Next order date = scheduled next (i) where that particular sku need to be
dispatched

• Dispatch frequency = The time duration in between two successful

dispatch operations based on this value next order date will be
calculated

• No.of Sku’s = This is the total number of sku’s available in the scenario
for our simulation No.of Sku’s has been taken as 100 skus

• Max.no of simulation = This indicates the number of days we want to run

this simulation, for this study it has been taken 1 year (365days) as
maximum number of simulation
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Random storage policy algorithm

• Random storage does exactly what it says. For each incoming
product, a random location is assigned to it.

• The only prerequisite is that the chosen location is still available.

The storage location then needs to be recorded for future retrieval
jobs.

• Some authors (e.g. de Koster et al., 2007) claim that it can only be
implemented correctly in a computer-controlled environment. If
operators are to choose freely, they will most likely opt for the first
open location, which would result into closest-open location
storage instead.

• This particular policy has been extensively used in other research

as a basis to look at the performance of picking policies. The
reason why it has been used so much is quite straightforward; it is
very simple to apply, no additional data is needed and it often
requires less space than other storage policies (Petersen II et al.,
1999).

• Random storage can also be described as an extreme case of class-

based storage, where there is only one class. Class-based storage
will be discussed later in this section. According to Chan et al.
(2011), random storage is often used in bulk storage areas that
utilize a computerized inventory system.
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Class based storage policy algorithm

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Simulation Scenarios

Simulation ID
Layout scenario Storage policy
WS001
Case 1 Random storage
WS002
Class based storage
WS003
Case 2 Random storage
WS004
Class based storage
WS005
Case 3 Random storage
WS006
Class based storage
WS007
Case 4 Random storage
WS008
Class based storage
WS009
Case 5 Random storage
WS010
Class based storage
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Total travel distance & time during 365 days of simulation

Total Travel Distance

Simulation ID Layout Type Storage policy Total Travel Time (hrs)
(Km)

WS001 Random Storage 7445.50 930.69

Case1

WS002 Class based storage 4485.06 560.63

WS003 Random Storage 6687.31 835.91

Case2

WS004 Class based storage 3881.09 485.14

WS005 Random Storage 6714.44 839.30

Case3

WS006 Class based storage 5387.08 673.39

WS007 Random Storage 5148.83 643.60

Case4

WS008 Class based storage 2645.45 330.68

WS009 Random Storage 5151.56 643.94

Case5

WS010 Class based storage 4627.86 578.48

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Total travel distance & time during 365 days of simulation

8000.00
7000.00
6000.00
5000.00
4000.00 Random Storage
3000.00 Class based storage

2000.00
1000.00
0.00
Case 1 Case 2 Case 3 Case 4 Case 5
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Total travel savings when applying class based storage policy

8000.00
% of cost 7000.00
Layout Random Class based Savings
saving
type Storage storage 6000.00

5000.00
Case 1 7445.50 4485.06 2960.44 39.76
4000.00
Case 2 6687.31 3881.09 2806.22 41.96 3000.00

2000.00
Case 3 6714.44 5387.08 1327.36 19.77
1000.00
Case 4 5148.83 2645.45 2503.38 48.62 0.00
Case 1 Case 2 Case 3 Case 4 Case 5
Case 5 5151.56 4627.86 523.69 10.17 Random Storage Class based storage Savings

• If this warehouse practices random storage policy then there will be no much
impact on using across aisle layout or U type layout.

• If this warehouse practices class based storage policy then U type layouts are much
more effective than across aisle type layouts.
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Layouts studied
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Total travel savings when applying class based storage policy

8000.00
% of cost 7000.00
Layout Random Class based Savings
saving
type Storage storage 6000.00

5000.00
Case 1 7445.50 4485.06 2960.44 39.76
4000.00
Case 2 6687.31 3881.09 2806.22 41.96 3000.00

2000.00
Case 3 6714.44 5387.08 1327.36 19.77
1000.00
Case 4 5148.83 2645.45 2503.38 48.62 0.00
Case 1 Case 2 Case 3 Case 4 Case 5
Case 5 5151.56 4627.86 523.69 10.17 Random Storage Class based storage Savings

• If this warehouse practices random storage policy then there will be no much
impact on using across aisle layout or U type layout.

• If this warehouse practices class based storage policy then U type layouts are much
more effective than across aisle type layouts.
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Conclusions and Recommendations

• The best performance in terms of total travel distance and time savings
come from class based storage.
• The layout type with multiple input output locations at one side of the
racking area achieve 48.62% of total travel distance saving when applying
class based storage, this is the best possible combination with highest
cost saving.
• And two across aisle I type layouts has been analyzed in case 3 and case 5
both are having travel distance savings respectively 19.77% and 10.17%.
These are two lowest values in this study.
• Class based policies are less affective to across aisle layouts with input
and output points at opposite sides, compare to layouts which have input
and output points at same side.
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Limitations of the research

• It has been assumed dispatch and receiving both occurred in full pallet loads.
But in practical situation lots will be ordered in cases also, which may lead to
order batching.

• The recommendation found here is significant only if the inventory follows

Pereto’s 80/20 rule. Otherwise applying class based storage policy is
questionable.

• The congestion factor of the research has not been studied, that also has to
be taken into consideration. If the sku’s has high correlation in dispatch or
receiving times then the congestion will be have high impact that need to be
studied.
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Suggestions and recommendations for future research

• Probabilistic inventory movement can be used to study this simulation
again.

• Simulation program can be re-developed in a way to simulate case picking

warehouse, here different pickling policies also can be studied.

• Congestion factor can be taken into account when simulating and

analyzing the results then time delay due to congestion also taken into
consideration.

• Finally there is lack of research in warehouse domain studying storage

policies qualitatively and quantitatively but at once that may lead to a
better decision support tool if studied.
Thank you
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Create distance matrix (Notations)

Nr : No of Racks
Nc : No of Columns in rack
Nr : No of Rows in rack
Dr : Deep of the rack
Wa : Aisle Width
Lc : Cell Length
Hc : Cell Height
Dc : Cell Depth
Ia : Input Aisle
Oa : Output Aisle
n : Rack
i : Column
j : Row
k : Deep
Lnijk : Location
SDnijk : Distance from input point to location Lnijk (Storage Distance)
PDnijk : Distance from output point to location Lnijk (Picking Distance)
TDnijk : Total Distance
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Create distance matrix (Notations)

If Ia and Oa are in same side then
SDnijk = i.Lc + j.Hc + |(Ia - (n + k – 1)) * (Dr.Dc + Wa)|

PDnijk = i.Lc + j.Hc + |(Oa – (n + k-1)) * (Dr.Dc + Wa)|

If Ia and Oa are in opposite side then

SDnijk = i.Lc + j.Hc + |(Ia - (n + k – 1)) * (Dr.Dc + Wa)|

PDnijk = (Nc-i + 1).Lc + j.Hc + |(Oa – (n + k-1)) * (Dr.Dc + Wa)|

TDnijk = SDnijk + PDnijk

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Screen shots of the simulation program