IE 478: Retail Services Engineering

Spring 2018
Homework #2 Distribution and Warehousing
Due 2.26.2018
Please do this in your assigned group and turn in one hard copy per group during class

1. [10 points] A warehouse processes 350,000 packages per year, and each package typically spends
about 2 weeks in the warehouse. On an average how many packages will be in the warehouse
inventory?

2. [30 points] Consider the following eight items, each with a unique SKU. The storage
requirements (in slot) for each item are normally distributed, as is shown in Table 1. Assume that
each slot has the same size.
SKU Mean “slots” needed Standard deviation

1 60 12

2 65 10

3 85 20

4 40 13

5 40 9

6 55 15

7 80 25

8 35 10

Table 1
Assume there are two classes, with class 1 having SKUs 1, 2, 3 and 4 assigned to it and
class 2 having the remaining SKUs. Determine the amount of dedicated space that would
be needed for the three different storage policies: Dedicated, Randomized and Class-
based Storage under a 90% and then 95% service level. Compare the results you get and
discuss your findings.

3. [40 points] A distribution center manager wants to find out which SKUs should be put
into the forward area and how much of each SKU to store in the forward area. There are
total of 10 SKUs that are being considered and the forward area can hold 500 cubic feet.
Data for the SKUs is provided in Table 2. Assume that the cost per restock is the same
for all SKUs, and is $3. Similarly, assume the cost per pick in the reserve area is the same
 for all SKUs and is $0.2/pick. Help the manager to solve these two problems with proper
calculations. Summarize your answers.
SKU Cost per Annual Volume
pick (𝒄𝒊 ) Number per Item
in of Picks (sq ft)
forward (𝒑𝒊 )
S1 0.14 600 3
S2 0.13 1000 2
S3 0.15 700 4
S4 0.12 800 2
S5 0.10 500 1
S6 0.13 200 3
S7 0.15 400 4
S8 0.17 300 6
S9 0.18 250 7
S10 0.14 900 5
Table 2

4. [20 points] Solve the line balancing problem, given in the following table, with a cycle
time of 100 seconds.
Task Time (sec) Required Precedence
Tasks
T1 35
T2 30 T1
T3 45 T1
T4 25 T1
T5 50 T4
T6 47 T2, T4
T7 55 T3
Table 3