IDEAS home Printed from https://ideas.repec.org/a/wly/navres/v48y2001i4p299-312.html
   My bibliography  Save this article

Warehouse sizing to minimize inventory and storage costs

Author

Listed:
  • Mark Goh
  • Ou Jihong
  • Teo Chung‐Piaw

Abstract

This paper considers a warehouse sizing problem whose objective is to minimize the total cost of ordering, holding, and warehousing of inventory. Unlike typical economic lot sizing models, the warehousing cost structure examined here is not the simple unit rate type, but rather a more realistic step function of the warehouse space to be acquired. In the cases when only one type of stock‐keeping unit (SKU) is warehoused, or when multiple SKUs are warehoused, but, with separable inventory costs, closed form solutions are obtained for the optimal warehouse size. For the case of multi‐SKUs with joint inventory replenishment cost, a heuristic with a provable performance bound of 94% is provided. © 2001 John Wiley & Sons, Inc. Naval Research Logistics 48: 299–312, 2001

Suggested Citation

  • Mark Goh & Ou Jihong & Teo Chung‐Piaw, 2001. "Warehouse sizing to minimize inventory and storage costs," Naval Research Logistics (NRL), John Wiley & Sons, vol. 48(4), pages 299-312, June.
    • Handle: RePEc:wly:navres:v:48:y:2001:i:4:p:299-312
    DOI: 10.1002/nav.10
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/nav.10
    Download Restriction: no
    File URL: https://libkey.io/10.1002/nav.10?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Robin Roundy, 1989. "Rounding Off to Powers of Two in Continuous Relaxations of Capacitated Lot Sizing Problems," Management Science, INFORMS, vol. 35(12), pages 1433-1442, December.
    2. Robin Roundy, 1985. "98%-Effective Integer-Ratio Lot-Sizing for One-Warehouse Multi-Retailer Systems," Management Science, INFORMS, vol. 31(11), pages 1416-1430, November.
    3. William L. Maxwell & John A. Muckstadt, 1985. "Establishing Consistent and Realistic Reorder Intervals in Production-Distribution Systems," Operations Research, INFORMS, vol. 33(6), pages 1316-1341, December.
    4. Cormier, Gilles & Gunn, Eldon A., 1992. "A review of warehouse models," European Journal of Operational Research, Elsevier, vol. 58(1), pages 3-13, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Shi, Ye & Yu, Yugang & Dong, Yuxuan, 2021. "Warehousing platform’s revenue management: A dynamic model of coordinating space allocation for self-use and rent," European Journal of Operational Research, Elsevier, vol. 293(1), pages 167-176.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chung-Piaw Teo & Dimitris Bertsimas, 2001. "Multistage Lot Sizing Problems via Randomized Rounding," Operations Research, INFORMS, vol. 49(4), pages 599-608, August.
    2. Li, Xiuhui & Wang, Qinan, 2007. "Coordination mechanisms of supply chain systems," European Journal of Operational Research, Elsevier, vol. 179(1), pages 1-16, May.
    3. Adeinat, Hamza & Pazhani, Subramanian & Mendoza, Abraham & Ventura, Jose A., 2022. "Coordination of pricing and inventory replenishment decisions in a supply chain with multiple geographically dispersed retailers," International Journal of Production Economics, Elsevier, vol. 248(C).
    4. Luca Bertazzi & Maria Grazia Speranza & Walter Ukovich, 2000. "Exact and Heuristic Solutions for a Shipment Problem with Given Frequencies," Management Science, INFORMS, vol. 46(7), pages 973-988, July.
    5. Chu, Chi-Leung & Leon, V. Jorge, 2008. "Power-of-two single-warehouse multi-buyer inventory coordination with private information," International Journal of Production Economics, Elsevier, vol. 111(2), pages 562-574, February.
    6. Bertazzi, Luca & Speranza, Maria Grazia, 2005. "Improved rounding procedures for the discrete version of the capacitated EOQ problem," European Journal of Operational Research, Elsevier, vol. 166(1), pages 25-34, October.
    7. Retsef Levi & Thomas Magnanti & Jack Muckstadt & Danny Segev & Eric Zarybnisky, 2014. "Maintenance scheduling for modular systems: Modeling and algorithms," Naval Research Logistics (NRL), John Wiley & Sons, vol. 61(6), pages 472-488, September.
    8. Leon Yang Chu & Zuo-Jun Max Shen, 2010. "A Power-of-Two Ordering Policy for One-Warehouse Multiretailer Systems with Stochastic Demand," Operations Research, INFORMS, vol. 58(2), pages 492-502, April.
    9. Dorit S. Hochbaum, 2004. "50th Anniversary Article: Selection, Provisioning, Shared Fixed Costs, Maximum Closure, and Implications on Algorithmic Methods Today," Management Science, INFORMS, vol. 50(6), pages 709-723, June.
    10. Bertazzi, Luca, 2003. "Rounding off the optimal solution of the economic lot size problem," International Journal of Production Economics, Elsevier, vol. 81(1), pages 385-392, January.
    11. Erenguc, S. Selcuk & Simpson, N. C. & Vakharia, Asoo J., 1999. "Integrated production/distribution planning in supply chains: An invited review," European Journal of Operational Research, Elsevier, vol. 115(2), pages 219-236, June.
    12. Qinan Wang, 2001. "Coordinating Independent Buyers in a Distribution System to Increase a Vendor's Profits," Manufacturing & Service Operations Management, INFORMS, vol. 3(4), pages 337-348, May.
    13. Wang, Qinan & Chay, Yiowmin & Wu, Zhang, 2011. "Streamlining inventory flows with time discounts to improve the profits of a decentralized supply chain," International Journal of Production Economics, Elsevier, vol. 132(2), pages 230-239, August.
    14. Graves, Stephen C., 1989. "A multi-echelon inventory model with fixed reorder intervals," Working papers 3045-89., Massachusetts Institute of Technology (MIT), Sloan School of Management.
    15. Julien Bramel & Shobhna Goyal & Paul Zipkin, 2000. "Coordination of Production/Distribution Networks with Unbalanced Leadtimes," Operations Research, INFORMS, vol. 48(4), pages 570-577, August.
    16. Kevin H. Shang & Sean X. Zhou, 2010. "Optimal and Heuristic Echelon ( r, nQ, T ) Policies in Serial Inventory Systems with Fixed Costs," Operations Research, INFORMS, vol. 58(2), pages 414-427, April.
    17. Lee, Dong Joo & Jeong, In-Jae, 2010. "A distributed coordination for a single warehouse-multiple retailer problem under private information," International Journal of Production Economics, Elsevier, vol. 125(1), pages 190-199, May.
    18. Kevin H. Shang & Zhijie Tao & Sean X. Zhou, 2015. "Optimizing Reorder Intervals for Two-Echelon Distribution Systems with Stochastic Demand," Operations Research, INFORMS, vol. 63(2), pages 458-475, April.
    19. Shiman Ding & Philip M. Kaminsky, 2020. "Centralized and Decentralized Warehouse Logistics Collaboration," Manufacturing & Service Operations Management, INFORMS, vol. 22(4), pages 812-831, July.
    20. Adeinat, Hamza & Ventura, Jose A., 2018. "Integrated pricing and supplier selection in a two-stage supply chain," International Journal of Production Economics, Elsevier, vol. 201(C), pages 193-202.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:navres:v:48:y:2001:i:4:p:299-312. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1002/(ISSN)1520-6750 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.