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Warehouse sizing to minimize inventory and storage costs

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  • Mark Goh
  • Ou Jihong
  • Teo Chung‐Piaw

Abstract

This paper considers a warehouse sizing problem whose objective is to minimize the total cost of ordering, holding, and warehousing of inventory. Unlike typical economic lot sizing models, the warehousing cost structure examined here is not the simple unit rate type, but rather a more realistic step function of the warehouse space to be acquired. In the cases when only one type of stock‐keeping unit (SKU) is warehoused, or when multiple SKUs are warehoused, but, with separable inventory costs, closed form solutions are obtained for the optimal warehouse size. For the case of multi‐SKUs with joint inventory replenishment cost, a heuristic with a provable performance bound of 94% is provided. © 2001 John Wiley & Sons, Inc. Naval Research Logistics 48: 299–312, 2001

Suggested Citation

  • Mark Goh & Ou Jihong & Teo Chung‐Piaw, 2001. "Warehouse sizing to minimize inventory and storage costs," Naval Research Logistics (NRL), John Wiley & Sons, vol. 48(4), pages 299-312, June.
    • Handle: RePEc:wly:navres:v:48:y:2001:i:4:p:299-312
    DOI: 10.1002/nav.10
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    References listed on IDEAS

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    1. Robin Roundy, 1989. "Rounding Off to Powers of Two in Continuous Relaxations of Capacitated Lot Sizing Problems," Management Science, INFORMS, vol. 35(12), pages 1433-1442, December.
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    Cited by:

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    2. Yonit Barron & Chananel Benshimol, 2024. "Emergency Supply Alternatives for a Storage Facility of a Repairable Multi-Component System," Mathematics, MDPI, vol. 12(17), pages 1-37, August.

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