Warehouse management (on-going)

Supply chain activities account for a significant part of a business costs, of which the Warehouse Management (WM) is one of the key activities (especially for short life-cycle products). According to the literature, considering products’ expiration time is crucial while making storage and picking decisions in a warehouse. Generally, products are divided into three categories based on their expiration time: (i) long life-cycle products, (ii) fashion products that lose value over time and (iii) short life life-cycle (or perishable) products. Diverse sales policies of perishable products with different expiration times would significantly complicate the WM. This results in higher operational costs of storage and picking, and non-operational costs of perishable products (e.g., hospitals and pharmacies only accept products with a minimum expiration time). In addition, other factors like temperature sensitivity, fragility, flammability and being toxic/radioactive may make the WM further complex.

As WM activities are getting more expensive and complex, businesses increasingly prefer to outsource them to Third-Party Logistics Providers (3PLs). In a competitive environment with customers’ diverse needs, 3PLs must increase their service level to survive. An efficient WM system can assist them to decrease their operational costs, including material handling and equipment maintenance costs. WM activities for 3PLs consist of receipt, storage, picking and delivery, from which picking is the costliest part. Storage decisions determine the assignment of arriving products to the eligible storage locations, called as the storage location assignment problem. On the other hand, order picking includes two sub-problems, (i) order batching problem and (ii) routing problem. As a preceding step, storage decisions affect picking decisions. Therefore, in this research, we simultaneously address decisions associated with the SLAP and order picking problem for a real 3PL in Iran, Aria Logistics. This 3PL is responsible for the product distribution of the Nestlé company in Iran, which is one of the world’s largest food and beverage companies.