Dynamic space allocation for temporary storage

Methods for assigning a temporary storage inventory, which arrives dynamically at storage areas, to storage space are discussed. It was assumed that no storage location was dedicated to a single type of inventory and that inventory positioned at a storage area could be relocated to another storage area. An attempt was made to minimize the total transportation, storage and handling costs of inventory for a given schedule of arrivals and departures. It is shown that the space allocation problem can be formulated as a minimum cost multi-commodity flow problem. A subgradient optimization algorithm was applied to solve the problem. A numerical experiment was conducted to evaluate the performance of the algorithm.