Designing a block stacked warehouse for dynamic and stochastic product flow: a scenario-based robust approach

The problem considered in this paper is motivated from a real life case. Conventional models in designing block stacked warehouse assume uniform and deterministic inflow and outflow of products in specific quantities and time intervals. These assumptions would lead to underestimation of space requirement for the case. Also, the possibility of leasing additional warehouse space during seasonal spikes was found to be unexplored in block stacking design literature. In this study, we develop a scenario-based model to address the decisions of warehouse size, lane depth and hiring of temporary additional warehouse capacity when flow of products is stochastic and dynamic in nature. A sequential decision model is presented with future operating scenarios assumed to branch out in the form of a tree. On comparison with conventional block stacking design methods, the model is found to provide robust solution in stochastic and dynamic environments in terms of risk reduction and infeasibility avoidance. Further, the model gives additional flexibility to the designer to trade-off model and solution robustness with predicted cost.