Applying six-sigma to warehouse operations: A case study of a local logistic company

Abstract

This thesis will focus on implementing the Lean Six-Sigma method, a topic that draw a large amount of attention from researchers in recent years. Issue of warehouse constraints will be addressed using Lean Six-Sigma techniques. The main purpose of this thesis is to improve the warehouse’s efficiency by resolving the Storage Location Assignment Problem (SLAP) to minimize the monthly expected distance in the warehouse. This goal is achieved by a mixed-integer linear model which generates solutions using an optimization software called CPLEX. Based on the dynamic nature of customer demand, the configuration of the storage area, an assignment model is developed. The results obtained from the operational data of the company are analyzed and recommendations are made in regards to the warehouse’s layout. By implementing this model, the results indicate that the distance travelled in the warehouse can be reduced in more than 2000 km/month by just reallocating items in different locations. Keywords: Six-sigma, warehousing, distance travelled, layout, CPLEX.