Last session we talked a lot about building a warehouse. We saw how the type of pallet or the type of machines used can influence the size of our warehouse.
What we did not consider is how influencing the allocation of the bin location can be. Should every product be stored on a fixed dedicated place or should we use a kind of chaotic system in which every product can be stored everywhere. Compare with figure:
Fixed Allocation Dynamic Allocation
The advantage of the fixed Allocation is the easy way of handling. Every worker knows where to bring and pick a certain kind of product. No complicated information systems were needed. The downside is that the a lot of places in the warehouse might be empty while other section of the warehouse are overfilled.
Exactly this downside can be eliminated by a dynamic allocation. The product will be stored where a free place in the warehouse exists. Consequently demand variations between products can be settled and the usage rate of the whole warehouse is higher. And a higher usage rate of the warehouse lowers the overall demand of size of the whole warehouse. A disadvantage is that such a system needs IT-Support. Such an investment can be very high and challenging for small businesses. Moreover a chaotic allocation is only possible if the stored products are very similar in their characteristics.
TUM, Prof. Dr. Ing. Gunther Reinhardt (2016), Script:Planning of a Factory