Development and implementation of an inventory location optimization algorithm for improved distribution center picking rates

Abstract

A strategic roadmap was developed for Waters Corporation detailing four central themes and twelve project proposals to direct future projects and innovations at the company over the next 3-10 years. Specific attention was paid to the growing need at Waters to shift processes from manual to automatic and to convert data collection and usage techniques from analog to digital. Pilots of two projects, Warehouse RFID-based Dock Door System and Inventory Relocation, were developed in conjunction with the preparation of the roadmap in order to provide proofs of concept and technology and to serve as reference points for future projects. The Inventory Relocation Pilot Project is discussed in this thesis. An automatic inventory relocation tool was developed to recommend product locations within Waters' Global Distribution Center (GDC). The tool was configured to allow full region reorganization, relocation of a specified number of stock keeping units, and recommendation of put-away locations for incoming shipments. The pilot was constrained to the high bay area at GDC due to the amount of available data for that region, but was designed to be easily extendable to include other regions in GDC and other Waters distribution centers. Simulations were run that showed greater than 40% reductions in the objective function that correspond to approximately 5% less time spent picking orders by material handlers, given the amount of available supporting data.