Robust Storage Assignment in Unit-Load Warehouses

Marcus Ang (), Yun Fong Lim () and Melvyn Sim ()
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Marcus Ang: Lee Kong Chian School of Business, Singapore Management University, Singapore 178899, Republic of Singapore
Yun Fong Lim: Lee Kong Chian School of Business, Singapore Management University, Singapore 178899, Republic of Singapore
Melvyn Sim: NUS Business School, National University of Singapore, Singapore 119245, Republic of Singapore

Management Science, 2012, vol. 58, issue 11, 2114-2130

Abstract: Assigning products to and retrieving them from proper storage locations are crucial decisions in minimizing the operating cost of a unit-load warehouse. The problem becomes intractable when the warehouse faces variable supply and uncertain demand in a multiperiod setting. We assume a factor-based demand model in which demand for each product in each period is affinely dependent on some uncertain factors. The distributions of these factors are only partially characterized. We introduce a robust optimization model that minimizes the worst-case expected total travel in the warehouse with distributional ambiguity of demand. Under a linear decision rule, we obtain a storage and retrieval policy by solving a moderate-size linear optimization problem. Surprisingly, despite imprecise specification of demand distributions, our computational studies suggest that the linear policy achieves close to the expected value given perfect information and significantly outperforms existing heuristics in the literature. This paper was accepted by Gérard P. Cachon, optimization.

Keywords: inventory; production; uncertainty; programming; linear; large scale systems; transportation; materials handling (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (20)

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