Integrating storage allocation with manual order picking and replenishment operations in a distribution centre

This paper introduces a mathematical programming formulation and a simulation-based heuristic for the allocation of storage positions to products picked by human operators on man-aboard vehicles traveling through the warehouse of a wholesale company. In this problem, the tactical level of the assignment decisions affects the operational level of the picking process. We propose a simulation-optimization framework that integrates the two. Our formulation of the storage location assignment problem also handles the constraint according to which a picking position should be paired with a (vertical) replenishment position for a given item. To solve realistic instances, we design an iterated local search (ILS) metaheuristic with an embedded discrete-event simulator (DES) that evaluates the most promising moves at each iteration. The DES allows reproducing the handling operations performed by multiple order pickers under uncertainty, mutual interferences and congestion-related phenomena. Overall, the flexible simulation-optimization (SO) framework evaluates the operational times and daily productivity of the order picking organization. Numerical results are presented for real data, under an S-shape picking policy with a skip-and-go rule to deal with lacking items. Under a proper tuning of the ILS parameters, the SO framework allows to achieve a nearly 17% improvement in warehouse productivity.