Optimal Storage Locations for Warehouse Efficiency Improvement in a Haircare Manufacturer

Abstract

This study aimed to enhance efficiency of raw materials warehouse in a case study haircare manufacturer in Thailand though identifying the optimal storage locations for materials locating at this raw materials warehouse. At the same time, it was our goal to increase capacity and improve utilization at internal raw materials warehouse in order to store some finished products at this internal warehouse instead of storing all of them at external public warehouse. As a result, the case study company can save storage cost of finished products at the external public warehouse. The key methodologies used to improve current raw materials warehouse were removing obsolete materials from warehouse, regrouping materials according to types, sizes, and turnover rate, reallocating space for each group of materials, considering beam height adjustment, and reassigning locations for each group of materials using optimization model. The results showed that capacity of raw materials warehouse was enhanced by 12.65%, picking distance was reduced by 51.9% compared to current situation, utilization was more balanced throughout warehouse and annual cost saving of 874,800 THB was obtained from locating some finished products at the internal raw materials warehouse. In addition, robustness of the proposed model was analyzed and contingency plan was developed for handling with over flow materials if over utilization occurs.