Optimizing Product Group Segmentation

Abstract

Piece picking is an integral operation in distribution centres (DCs). The partner company has it as the largest part cost item of DC operations. The current product slotting and assignment planning needs to be improved to improve space utilization and reduce labour expenses. The team approached the problem by using a two-staged ABC segmentation method to determine the a more efficient slotting. The derived slot assignment results in an average saving of 27.62% in travel distance. This Capstone therefore offers a novel perspective into piece-picking optimization and improves efficiency and cost effectiveness.