Optimization of material handling in production and warehousing facilities

In this paper we consider the problem of minimizing material handling costs in manufacturing systems or warehousing facilities, subject to constraints that restrict the start and end time of each production or picking/packaging activity, according to pre-specified daily operational schedules and process planning information. The underlying decision problem is modeled using an integer programming formulation similar to the vehicle routing problem with time windows. Since the problem is NP-complete, we develop an efficient heuristic to solve it in short processing time. The method, called penalty-based heuristic, allows routes to be constructed by exploiting the tradeoff between material handling and resource starvation costs. The steps of the method are illustrated via a comprehensive example.