Simulation Modeling of Dual Warehouse System

Abstract

Warehouse space allocation is a critical issue to be addressed in many firms, especially firms that have various types of products. Further, most of the owned warehouse has a limited capacity which leads to the usage of outsourcing policy for warehouse storage. In this case, a rented warehouse that has more flexibility in terms of capacity is used to store the products. Therefore, an optimal decision of warehouse configuration is required. The previous study proposed a two-stage stochastic optimization model for warehouse configuration and inventory policy for deteriorating items. Unfortunately, direct implementation of their proposed method in real case problems will incur high cost and takes up a lot of time. In this research, a simulation model is developed to monitor the real condition in the company as well as to ensure that the warehouse configuration is suitable to be implemented. A textile and apparel company is used as the study case. The result shows that simulation model can be used to monitor the real condition as well as to obtain the net profit when facing different demand possibility. Keywords: inventory control; real-time monitoring; system simulation; warehouse configuration; warehouse space allocation