A simulation model to improve warehouse operations

Warehouse or distribution centre managers have to decide how to collect the products to fulfill customers requests but also where to locate the products (SKUs) and how much space to allocate to each of them. Moreover, they have to deploy replenishment strategies to guarantee the reliability of their own stocks. These are challenging decisions because of their level of complexity and their high impact on the centre performance in terms of both its throughput and the operation costs. In particular, the goal of this work is to evaluate whether specific strategies to share the storage space could lead to reduce the operation costs while keeping the service level as high as possible. To this end, this paper develops a discrete event simulation model of the logistic operations at a real high throughput warehouse which handles more than 12 millions of cases annually. Preliminary results show that potential economies may be achieved by reducing the number of stock-outs at the picking area where customer orders are collected.