Two Stages Optimization For Class-Based Warehouse Allocation Problem

Abstract

The aim of this study is to address the product allocation problem with operational constraints among warehouses and prevent the decentralization of products in the warehouse. In order to do that, a Mixed Linear programming model with two stages optimization is proposed to solve the problem. The first stage is to assign SKUs (Stock-Keeping-Unit) i in particular warehouse k in specific time T and determine its capacity in particular point of time t. The second stage aim at solving the warehouse allocation problem in each chosen warehouse k in specific time T. Our model can be used to support the decision making process related to: (1) the determination of storage capacity for warehouses, (2) the assignment of SKU to the specific warehouse, (3) management of re-warehousing handlings, (4) decentralized management of each storage warehouse ‘s layout. This kind of model can be applied in any industry, especially suitable for FMCG industry and for those companies have to deal with demand fluctuation and limited capacity. A numerical example illustrates the application and the potential of the proposed models. Keywords: Class-based storage; Storage assignment; Storage allocation; Warehouse management; Product Allocation Problem