A computerized system for storage location assignment in third party warehouses

The storage location of products in a warehouse has important implications for storage and order picking times, and hence for overall warehouse efficiency. Most analytic models in the literature address traditional warehouses where material flows from receiving to storage and from storage to shipment. Increasingly, today's warehouses are experiencing more complex flows due to value-added transformations, as warehouses seek to become more than cost centers that provide temporary storage and product aggregation. In this paper, we present a heuristic method for assigning products to storage locations in third party warehouses that, in addition to providing storage, also provide assembly and kitting operations. This method is demonstrated via a case study and an associated computational system that supports the analyst in storage location planning.