A hierarchical procedure for the storage allocation and assignment within an order picking system. A case study

Advanced approaches to improve order-picking efficiency can significantly reduce customer response time in a supply chain system, decrease the overall logistic costs, and improve the customer service level. This paper focuses on storage allocation to properly define the right inventory level for each stock-keeping unit (SKU) and on the storage assignment problem to properly locate the SKU to the most convenient positions. The aim of this paper is to present a systematic hierarchical top-down procedure that allows the combining of sequential decision steps concerned with allocation and assignment issues. The proposed procedure is applied to a case study, and the results obtained from a what-if analysis are presented.