Safeway designs mixed-product pallets to support just-in-time deliveries

In 1998, Safeway milk plants began daily deliveries to most stores, doubling their delivery frequency. The new schedule increased the workloads for assembling orders at the milk plant by 20 percent because, under the new system, very few store orders called for full pallets of a single product, and store-specific mixed pallets were time consuming to assemble. To reduce the excess workload, we designed two types of standard mixed pallets that, in quantities of one to three, could satisfy part of the demands of many stores on most days, thereby reducing the need for store-specifc mixed pallets. Our mathematical model optimizes the design of the standard mixed-product pallets. These mixed-product pallets can be assembled prior to the peak shipping periods and during other off-peak times to ease peak workloads and eliminate excessive overtime. Safeway implemented the solution without our assistance and continues to use it nearly five years after implementation with good results.