Optimizing Production And Warehouse Operation Cost Under Random Storage Policy: A Case Study Of A FMCG Company

Abstract

Warehouses and factories are two important components in the supply chain, operating warehouses combined with production is a huge challenge for businesses today, operating warehouses using old methods such as class -based has revealed certain weaknesses when the size of the product increases rapidly. In this study, we have built an optimal model of operation using MILP method, our method is detailed to each picking and storing location. This can help businesses track-trace every small change of each location in the warehouse. The objective function of our method is to minimize the operating costs of the company, our model reduces costs by 6.14%. In addition, sensitivity analysis is performed to assess responsiveness when demand doubled. In addition, we also evaluated the impact of the model on Economic, social, and environment. Finally, this model can be applied in practice and businesses should consider applying.