warehouse/ capacity decisions

Question 1

what is a warehouse

Answer 1

• facility where items are temporarily stored (SKUs)
• essential part of the SCM
• increasingly outsourced to logistics service providers

Question 2

roles of warehouse

Answer 2

• consolidation
• —> product mixing and reduce transportation costs
• buffering (storage)
• —-> allows different areas of the suppy chain to operate independently, operational efficiency, reduce customer lead times
• value-added service
• —-> specific roles in the warehouse, packaging, pricing, labeling, kitting, customization

Question 3

consolidation warehouse vs distribution

Answer 3

Consolidation - combines shipments from a numnber of sources in the same geographic area into larger, economical shipping loads

Distribution -> receives large incoming shipments and splits them to smaller outgoing shipments to demand points in a georgraphic area

Question 4

why are warehouses beneficial to companies?

Answer 4

• transportation economies
• production economies
• quantity discounts/ forward buys
• protection against uncertainties/ demand fluctuations
• overcoming time and space differences between producers and customers
• reverse logistics (storing temporary items o be disposed or recycled)

Question 5

Challenges of warehouse

Answer 5

• smaller order
• shorter response times
• larger product variety

Question 6

difference between warehouse and cross-docking

Answer 6

• no storage/ order picking involved
• goods are sorted/consolidated/ transferred from inbound trailer to outbound trailers
• only receiving/ shipping function
• customer is known before goods arrive

Question 7

main warehousing activities

Answer 7

• receiving (unloading, update inventory record, incpect quality/quantity)
• storage (repackage, transfer to storage location)
• order picking (retrieval) -> most labor-intensive activity,
• preparing for shipping -> value-added services (pricing, labeling) and packed and stacked in right load unit

Question 8

Decisions that determine the efficiency of warehousing activities

Answer 8

1. layout of the warehouse
2. operations strategy (not changed frequently)
   - —a. storage strategy -> where to store sku?
   - —b. order picking strategy -> how to retrieve sku?
   - —objective: maximize service level

Question 9

forward reserve configuration

Answer 9

• large reserve area: bulk items
• small forward area: order picking items
  advantage: picking efficiency, reduced distance
  disadvantage: need to replenish forward area from reserve area

Question 10

storage strategy location assignment policies

Answer 10

• dedicated
• full-turnover
• class-based
• family grouping

Question 11

storage strategy rules

Answer 11

1. dedicated: fixed location for SKUs
   - > pro: order pickers will become very familiar with SKU locations, meaning efficient and less likely to make errors
   - > con: importance for certain SKUs might change overtime
2. full turnover strategy: highest sale SKUs closest to the depot
   - > optimize warehousing activities
   - > con: confusing to order pickers if location changes too much, requires a lot of data and effort
3. Class-based strategy: a compromise between full turnover and dedicated
   - > divide SKUs to 3: A (highest turnover), B(moderate turnover), C(low turnover)
4. Family grouping: related SKUs are stored together (salt shaker and pepper shaker)

Question 12

order picking strategy

Answer 12

• order picking is very labor-intensive
• 50% of time spent on travel time
• searching and picking should be done more than traveling
• Either employ humans or employ machines
• Humans -> picker to parts (zoning, batching, routing) or parts to picker (tech: robots, AGV)
• Machines -> fully automated

Question 13

Picker-to-parts strategy

Answer 13

1. Zoning
   - > each order picker assigned to single-zone
   - > pros: familiar with locations
   - > cons: different skus of the same order might be in different zones
   - > consolidation strategies: progressive (order picked zone by zone) or synchronized (picked at the same time and merged at the end)
2. Batching
   - > picking a set of orders in a single picking tour
   - > pros: reduces travel distance
   - > criteria: timing of orders, the proximity of orders, order due times are respected
   - > sorting done during or after picking tour
3. Routing
   - >list of skus and their quantities assigned to a single order picker and sequencing the items on the pick list to ensure short route through the warehouse
   - > S-shape (works with within aisle storage), Return (across aisle & diagonal), Mid-point (permieter), Largest gap (perimeter)

Question 14

warehouse management systems

Answer 14

used to run daily operations and track inventory levels in automated way

Question 15

RFID

Answer 15

data chip that sends out information as microelectric waves that can then be scanned in the warehouses

Question 16

class based strategy

Answer 16

1. within aisle: A items placed in the middle aisle in front of depot, then B, then C
2. across aisle: A items placed in the first few lanes of the aisles closest to depot
3. diagonal
4. perimeter: outer lanes A, inner lanes B then C