Publication Type

Journal Article

Version

Publisher’s Version

Publication Date

11-2012

Abstract

Assigning products to and retrieving them from proper storage locations are crucial 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 multi-period 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.

Keywords

inventory, production, uncertainty, programming, linear, large scale systems, transportation, materials handling

Discipline

Operations and Supply Chain Management

Research Areas

Operations Management

Publication

Management Science

Volume

58

Issue

11

First Page

2114

Last Page

2130

ISSN

0025-1909

Identifier

10.1287/mnsc.1120.1543

Publisher

INFORMS

Additional URL

http://dx.doi.org/10.1287/mnsc.1120.1543

Comments

Published version made available in SMU repository with permission of INFORMS, 2014, February 28

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