Managing space in forward pick areas of warehouses for small parts
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Many high-volume warehouses for small parts such as pharmaceuticals, cosmetics and office supplies seek to improve efficiency by creating forward pick areas in which many popular products are stored in a small area that is replenished from reserve storage. This thesis addresses the question of how to stock forward pick areas to maximum benefit by answering two key, inter-related decisions that have been called Assignment-Allocation. The assignment question asks which SKUs should be stored in the forward pick area? And the allocation question asks how much space should be allocated to each SKU? We show fast, simple, near-optimal algorithms to answer these questions in a variety of circumstances. To allocate space to SKUS, we introduce a Powers of Two allocation scheme designed to simplify shelf management. In addition, we present a ranking-based algorithm to assign SKUs and allocate space among multiple forward pick areas. We show that a similar algorithm that accounts for constraints on congestion and workload within the forward pick area. We also show how to determine the optimal assignment for warehouses with one or more forward pick areas that allocate space in ways that are common in practice. Warehouses frequently use the 80-20 rule to manage SKUs based on their popularity. We examine empirical data from thirty warehouses and analyze whether the power law distribution is a suitable fit. We test the hypothesis that the power law fits of warehouses in similar industries are themselves similar. We review explanations for why power laws arise in other settings and identify those that are plausible in the warehouse setting.