Recency‐based storage assignment and warehouse configuration for recurrent demands

Storage assignment is an important decision problem in warehouse operation management. In conventional problem settings of distribution warehouses, stock items are stored in bulk but retrieved in small quantities. Storage assignment methods typically make use of demand attribute information of order quantity, order frequency and correlation between demands. In this paper, we address a different problem in which the request for the same stock items is stochastically recurrent. The problem arises when the items are needed in production and, after production, are returned to warehouses for later reuse. Examples of such items include tooling in factory, books in library and digital objects in data warehouses. Utilizing the recurrent characteristics, a salient recency‐based storage assignment policy and an associated cascaded warehouse configuration are proposed and analyzed in this paper. This paper has four parts. In the first part, a model of recurrent demand is described. In the second part, the efficiency of the recency‐based policy and a traditional ID‐based policy is analyzed. In the third part, a mathematical programming model for optimal configuration of cascaded warehouses is presented. Finally, a case study of hospital visits is presented. This paper concludes with recommendations on cascading and zoning the warehouse for applying the recency‐based policy.