Storage allocation framework for designing lean buffers in forward-reserve model: a test case

The retail revolution swing from traditional distribution to e-tailing services and unprecedented increase in internet adoption insist practitioners to diversely plan warehousing strategies. More than practically required storage space has been identified as wastes, and also it does not improve performance. An organized framework integrating storage design policies, operational performance and customer value improvement for retail-distribution management is lacking. Therefore, the purpose of this paper is to develop broad guidelines to design the “just-right” amount of forward area, i.e., “lean buffer” answering the following questions: “What should be lean buffer size? How effective the forward area is? As per demand variations, which storage waste (SKU) should be allocated with how much storage space? What is the amount of storage waste (SW)? How smooth the material flow is in between reserve-forward area?” for storage allocation in cosmetics distribution centers.

After forecasting static storage allocation between two planning horizons, if a particular SKU is less or non-moving, then it will cause SW, as the occupied location can be utilized by other competing SKUs, and also it impedes material flow for an instance. A dynamically efficient and self-adaptive, knapsack instance based heuristics is developed in order to make effective storage utilization.

The existing state-of-the-art under study is supported with a distribution center case, and the study investigates the need of a model adopting lean management approach in storage allocation policies along with test results in LINGO. The sensitivity analysis describes the impact of varying demand and buffer size on performance. The results are compared with uniform and exponential distributed demands, and findings reveal that the proposed heuristics improves efficiency and reduce SWs in forward-reserve area.

The presented model demonstrates a novel thinking of lean adoption in designing storage allocation strategy and its performance measures while reducing wastes and improving customer value. Future research issues are highlighted, which may be of great help to the researchers who would like to explore the emerging field of lean adoption for sustainable retail and distribution operations.