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A heuristic approach to warehouse layout with class-
based storage
T. NICK LARSON
a
, HEATHER MARCH
b
& ANDREW KUSIAK
a
a
Intelligent Systems Laboratory, Department of Industrial Engineering , The University of
Iowa , Iowa City, IA, 52242-1527, USA
b
Hon Industries, Inc , Muscatine, IA, 52761-7109, USA
Published online: 30 May 2007.
To cite this article: T. NICK LARSON , HEATHER MARCH & ANDREW KUSIAK (1997) A heuristic approach to warehouse layout
with class-based storage, IIE Transactions, 29:4, 337-348, DOI: 10.1080/07408179708966339
To link to this article: http://dx.doi.org/10.1080/07408179708966339
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lIE Transactions (1997) 29, 337-348
A heuristic approach to warehouse layout with class-based
storage
T. NICK LARSON}, HEATHER MARCH
2
and ANDREW KUSIAK
l
JIntelligent Systems Laboratory, Department of Industrial Engineering, The University of Iowa, Iowa City, IA 52242-1527, USA
2Hon Industries. Inc., Muscatine, IA 52761-7109, USA
Received January 1995 and accepted November 1996
This paper presents a procedure for warehouse layout. It employs the principles ofclass-based storage to increase floor space utilization and
decrease material handling. Three phases of the procedure are outlined: (1) determination of aisle layout and storage zone dimensions, (2)
assignment of material to a storage medium, and (3) allocation of floor space. An industrial case study illustrates the procedure for a
warehouse required to store 739 different products totaling more than 10000 pallets of material. An improved layout was developed and
compared with the existing alternative. The proposed layout offered savings of more than 20000 square feet of floor space and an
approximately 45% reduction in material handling distance.
1. Introduction
Warehousing can be defined by three functions: (1)
receiving goods from a source, (2) storing goods until
they are needed by a customer (internal or external), and
(3) retrieving the goods when requested. Storing material
for an internal customer implies the need for work-in-
process (WIP) storage, whereas storing goods for an
external customer may imply the need for finished
product storage. However, the functions of warehousing
remain the same and, thus, successful warehouse layouts
must, accomplish the following objectives, regardless of
the material being stored [I]:
(1) maximize the use of space;
(2) maximize the use of equipment;
(3) maximize the use of labor;
(4) maximize accessibility to all items;
(5) maximize protection of all items.
Although the objectives of warehouse layout and opera-
tion are easily recognized, warehouse layout problems
are often complicated by large varieties of products
needing storage, varying areas of required storage space,
and drastic fluctuations in product demand. Optimal
approaches to warehouse layout problems often consider
a single objective (i.e., maximize floor space utilization)
and/or provide a solution to a static problem. Some
recent research in warehouse layout is discussed in.
Section 2.
Warehouse design problems are further complicated
by _alternative storage methods and equipment. For ex-
0740-817X 1997 "lIE" .
ample, material may be handled by pallet, case, or bulk
items and the system may use lift trucks, conveyors, or
automated storage and retrieval (AS/R) systems. To limit
the scope of problems encountered in practice, this paper
focuses on single-command lift truck storage and retrie-
val of paJJets (i.e., one storage or one retrieval of a pallet
is performed per trip between storage and the inputJ
output point). This system is typical of many industries
observed by the authors and should be of interest to a
large audience. Furthermore, a clear definition of a
particular type of warehousing system allows us to
present a sensible heuristic procedure and illustrate it
with a meaningful case study. As a result, we intend to
provide a method for warehouse layout and operation
that is attractive to practitioners in a variety of indus-
tries.
To achieve effective use of floor space and equipment,
the layout must maximize floor space utilization and
minimize travel time (and/or distance). The layout must
also be robust to fluctuations in inventory level and
demand. Section 3 presents a heuristic procedure for
layout of a warehouse with pallet storage. The class-
based storage approach considers average inventory le-
vels, frequency of single command operations (i.e.,
throughput), storage medium (i.e., racks or floor stack-
ing), aisle width, row depth (for floor stacking), and
fluctuations in inventory and throughput. The case study
in Section 4 illustrates how the procedure can drastically
improve an' alternative ad hoc layout. Future research
issues and concluding remarks are provided in Section 5.
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2. Related research
The literature on warehouse layout and operations is
extensive. Three areas of research are particularly ap-
plicable to the problem of lift truck pallet storage and
retrieval: (1) stock location policy selection, (2) travel
time and/or distance considerations, and (3) floor space
allocation. This section provides a brief overview of
some related research.
Several stock location policies have been discussed in
the literature, including dedicated storage, randomized
storage, and class-based storage. Francis et al. [2] pro-
vide an overview of these methods, as well as the shared
storage location policy. An early paper by Ballou [3]
discusses the roll of storage location policies in ware-
house layout. Several authors have provided comparisons
of storage location policies, including Harmatuck [4],
Roll and Rosenblatt [5], and Wilson [6]. Eynan and
Rosenblatt [7] applied class-based stock location to the
study of automated storage and retrieval (AS/R) systems.
Rosenwein [8] used cluster analysis and order picking
data to establish class-based storage. The procedure
presented in this paper establishes classes based on floor
space utilization, frequency of single-command storage
or retrieval, and average inventory level.
Much of the research in the area of travel time and/or
distance reduction has been motivated by the need to
improve the efficiency of the order picking operation.
The problem has frequently been formulated as a travel-
ing-salesman model [9]. However, the problem consid-
ered in this paper deals with single-command operations
and there is no need for the development of a formal
model. The heuristic procedure presented in Section 3
considers the rectilinear (or rectangular) distance from
warehouse input point, to storage location, to output
point. A variety of topics related to movement .of
material handling devices are addressed in [10].
Floor space allocation in storage systems has received
less attention in the literature.. Larson and Kusiak [11]
presented a generalized transportation problem formula-
tion for work-in-process (WIP) space allocation and
illustrated the model with a case study. Space allocation
within the facility is more generally treated as the
facility layout problem [12], in which departments are
arranged according to some cost objective and qualita-
tive material flow and/or administrative constraints. In
the procedure presented in this paper, storage regions are
determined for each class and prioritized for the facility
layout, The regions are sized in a way that reduces
'honeycombing' [13] and, as a result, the storage regions
assume varying areas (see Section 3.2). Note that hon-
eycombing occurs when storage locations are partly
filled by items or lots that cannot be mixed or are
blocked from access. A recent paper by Lacksonen
[14] addresses facility layout problems with varying
areas. Although recent results in this area are not inte-
Larson et al.
grated with the heuristic approach presented in this
paper, the authors recognize this component of the
problem as an opportunity for future research.
In addition to the research cited in the areas of stock
.location policies, travel time considerations, and floor
space allocation, the reader may find the following
publications of interest. Lanker [15] provides a detailed
description of lift trucks as material-handling devices.
The basics of pallet storage systems are discussed in a
two-part series by Ross [16,17].
3. A class-based storage procedure for warehouse
layout
This section presents a heuristic procedure for detennin-
ing warehouse layout in a lift truck pallet storage and
retrieval environment. The procedure is motivated by (1)
the utilization of lift truck pallet storage in many in-
dustries, and (2) the need for a practical method that
provides an alternative to the ad hoc layouts that are
often implemented in the absence of formal analysis and
design.
3.1. Class-based storage rationale
Warehouse operations are usually governed by one of
three storage policies: randomized storage, dedicated
storage, or class-based storage. In randomized storage,
inventory is allocated a storage location based on the
available space at the time of the storage job. The
location is recorded for future retrieval jobs. The dedi-
cated storage policy assigns material to a predetermined
location based on throughput and storage requirements.
All storage jobs of a given material are routed to the
dedicated storage location. Class-based storage is a
compromise between randomized and dedicated storage.
Inventory is assigned a class based on some criteria (i.e.,
demand, product type, size) and each class is assigned a
block of storage locations. Within each block of storage
locations, material is stored randomly.
A cost tradeoff is often realized between dedicated
and randomized storage. Although dedicated storage
typically reduces the material handling cost, more sto-
rage space is required for each product to prevent over-
flow. Alternatively, randomized storage usually requires
less storage space; however, the material handling cost is
often greater because there is no effort to store fast-
moving material in the most desirable storage locations.
This paper proposes class-based storage for lift truck
pallet storage and retrieval warehouses. The objective is
to group material with similar characteristics and allo-
cate floor space on the basis of group priority. The
classification procedure seeks to increase floor space
utilization by limiting the effects of 'honeycombing'
[13,16], and decrease material handling by ranking items
based on throughput and storage space requirements.
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Heuristic approach to warehouse layout 339
Each class is assigned to a storage region; however,
within the storage region material is stored randomly.
Random storage within the region provides flexibility to
accommodate variations in inventory level for material
assigned to the class. Thus, the proposed class-based
storage policy increases the floor space utilization, de-
creases the material handling cost, and increases flex-
ibility.
3.2. The class-based procedure
Before presenting the class-based procedure for ware-
house layout, it is necessary to establish several assump-
tions. Although these assumptions may appear to be.
limiting, the method can be generalized to accommodate
most practical scenarios, as illustrated in Section 4.
Furthermore, enhancements of the procedure are an
expected result of the future research issues discussed
in Section 5. The assumptions are summarized below:
1. The facility is rectangular and the dimensions are
known.
2. Material enters the facility via a single input point
(i.e., a receiving dock).
3. Material exits the facility via a single output point
(i.e., a shipping dock).
4. Each storage region consists of only one storage
medium (i.e., rack or floor stack). .
5. All primary aisles are parallel and the same length.
The procedure can accommodate more complex facil-
ities by decomposing the layout problem into rectangular
components with single input and output points. In fact,
the physical characteristics of the facility are only of
interest in determining the direction and length of an
initial primary aisle, which is the basis for subsequent
primary aisles. Classes are formed and storage regions
are sized according to throughput and storage require-
ments.
The computational procedure in this paper includes the
following three phases: Phase 1: determination of aisle
layout and dimensions; Phase 2: assignment of material
to a storage medium; and Phase 3: allocation of floor
space. In Phase 1, the direction and length of the initial
aisle are determined, as well as the other necessary
dimensions. Each item is assigned a storage medium in
Phase 2. CJasses are allocated floor space in Phase 3 and
subsequent primary aisles are added to the layout.
zone of some storage medium, such as racks or floor
stacking. The rack dimensions or row depth determines
the size of the storage zone. Aisles and zones of storage
are added to the layout until all material that requires
storage has been assigned a class and storage zone in the
warehouse.
It is assumed that material enters the warehouse at a
single input point and exits the warehouse at a single
output point. Therefore, the most desirable path of travel
covers the shortest rectilinear distance from input point
to output point. The shortest travel time path is deter-
mined so that: (1) the rectilinear distance from input
point to output point is minimized, (2) the number of
comers on the path is minimized, and (3) the length of
the longest arc on the path is maximized. Based on these
objectives, the most desirable path is easily determined
by examination. The direction and length of the longest
arc on the path defines the direction and length of the
initial primary aisle. Fig. 1 illustrates three possible
paths through a facility with a single input point and a
single output point: According to the objectives stated
above, path (b) is obviously the best solution.
When the input point and output point of the ware-
house are at the same location, selection of an initial
aisle is somewhat arbitrary. In general, if many classes
are desired and it is expected that the corresponding
storage zones are of varying sizes (i.e., varying row
depths), aisles should be shorter and more frequent.
Alternatively) if fewer classes are desired, a lesser
number of longer aisles are desired. Fig. 2 shows
primary aisle layouts for various input/output point con-
figurations.
To simplify the classification procedure, it is useful to
represent dimensions in units of floor space) or slots,
rather than some known unit of measurement (i.e., feet,
meters). Let a slot represent the smal lest unit of assign-
able floor space. Typically, the slot length 8
1
and slot
depth Sd are equal to the pallet dimensions (plus the
necessary clearance allowance). Recall that a zone de-
fines an area that can be allocated for storage (i.e., racks
or floor stacking). The procedure establishes dimensions
for zone length L and zone depth Di, where k denotes the
kth storage zone. Although the zone depth D
k
can vary
P:nh (a)
Fig. 1. Alternative paths through a rectangular warehouse. ,
Output
point
,
:
P:uh(c)
Path (b)
[.....-. I r ~
Input
point
Phase 1: Determine aisle layout and dimensions
The direction of aisles must first be determined; how-
ever, it is not necessary to determine the frequency (or
spacing) of aisles a priori. The objective of the heuristic
layout procedure is to determine classes that define
different storage regions in the facility. It is assumed
that each aisle serves the two storage regions on either
side of the aisle. A region may also be referred to as a
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340 Larson et al.
\ \ I I

I I I 1
InpurJouput
point
(a)
Output
point
1: 1:1 11< I I <I
,I I I 1
I I I'
Input
point
(b)
1'4 J I

Table 1. Floor space consumed and capacity of a storage location
for various storage mediums
Fig. 2. Primary aisle layouts for various input/output point con-
figurations.
between zones, it is assumed that the zone length L is the
same for all storage zones. The aisle length is used to
determine the zone length L. The zone length should
exclude any allowances for secondary (or service) aisles
at either end of the zone (and possibly even throughout
the zone). Thus, storage zone k is said to be L slots long
and Die slots deep. Fig. 3 illustrates storage zone and slot
dimensions.
The zone depth Dk is a function of the storage
medium. For each item, the objective is to determine
the storage medium (and corresponding zone depth) that
minimizes the effects of 'honeycombing'. Honeycomb-
ing occurs when storage locations are partly filled by
items or lots that cannot be mixed or blocked from
access. Two types of storage are typical of lift truck
pallet storage and retrieval warehouses, rack and floor
stacking. A combination of both types of storage may be
used in the warehouse and, furthermore, there may be
several different types of racks and/or varying row
depths for floor stacking. Before assigning items to
Storage zone
1. Identify a path from input point to output point
such that:
(a) the rectilinear distance from input point to
output point is minimized;
(b) the number of turns is minimized;
(c) the length of the longest arc on the path is
maximized.
Note: If input/output point is at the same location,
consider the number and size of desired classes
and arbitrarily choose an initial primary aisle.
2. Establish an initial primary aisle along the longest
arc of the path identified in (1).
3. Establish slot dimensions based on pallet dimen-
sions, rack dimensions, and the necessary clear-
ance allowances.
4. Determine the storage zone length L (in slots)
based on the length of the initial primary aisle and
any secondary aisles.
5. Identify storage mediums for consideration in
Phase 2 (i.e., rack and/or n-deep floor stacking).
Fig. 3. Storage zone and slot dimensions.
classes, it is necessary to identify the types of storage
to consider. For example, the warehouse may use four-
tier one-deep rack storage for items that cannot be
stacked, and three-deep, four-deep, and five-deep. floor
stacking for items that can be stacked. Each item (or lot
number) is assigned to a storage location in the ware-
house. However, because several different types of sto-
rage are used, the size and capacity of the storage
location varies. Table 1 lists the floor space consumed
and capacity of a storage location for each storage
medium. The capacity of a storage location for floor
stacking depends on the stack height h of the item
stored. Phase 2 of the procedure determines the storage
medium for each item such that storage location utiliza-
tion increases.
The following steps summarize the activities in Phase
1: '
I
3h
4h
5h
0.25
3
4
5
Floor space Capacity per
consumed per storage location
storage location (slots) (pallets)
...
- - -

Aisles
...

- - - - - -
...
-
- Aisles
- - -
..
lnput Output
point point
(e)
Four-tier one-deep rack
Three-deep floor stack
Four-deep floor stack
Five-deep floor stack
Storage medium
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lr
F(sj)
Heuristic approach to warehouse layout
Phase 2.' Determine storage medium
The proposed classification procedure is based on storage
medium. The algorithm presented below determines the
storage medium for an item (or a lot) based on average
inventory level, honeycombing, fluctuations in inventory
level, and stack height. Targeted at practitioners, the
algorithm lends itself to implementation with spreadsheet
applications and standard database functions. The fol-
lowing data are needed for n items requiring storage:
(1) the average inventory level Sj for j = 1, ... , n;
(2) the stack height h
j
for j = 1, ... ,n;
(3) the maximum row depth d
max
for floor stacking;
(4) a percentage allowance for honeycombing and
inventory fluctuation a;
(5) a minimum stack height h
min
for floor stacking;
(6) a minimum row depth d
min
for floor stacking.
The procedure is specifically designed to determine the
row depth that maximizes storage location utilization for
floor stacking. If rack storage is available, it is necessary
to consider a classification criterion for assigning an item
to that medium. Two possible criteria are: (1) a mini-
mum stack height for floor stacking (i.e., an item with a
stack height h
j
less than an established minimum is
assigned to rack storage), and (2) a minimum row depth
for floor stacking (i.e., an item with a calculated row
depth less than an established minimum is assigned to
rack storage). The following notation is used in the row
depth algorithm:
n the number of items requiring storage;
j index for item U= l , ... ,n);
h
j
stack height for item U= I, ... ,n);
Sj average inventory level for item U= 1, ... ,n);
a percentage allowance for honeycombing;
h
min
minimum stack height for floor stacking;
d
max
maximum row depth for floor stacking;
d
min
minimum row 'depth for floor stacking;
N, number of storage locations required for item
U= l , ... ,n);
optimal row depth for item U= 1, ... , n);
current number of storage locations required;
a function of the rack design that provides the
number of storage locations needed to store Sj
pallets.
Row depth algorithm:
INPUT: n, hj U= 1, ... ,n), Sj U= 1, ... ,n), at h
min
,
d
max
, d
min
OUTPUT: Nj,
Step O. Let j = 1
Step J. IF h
j
< h
min
go to Step 5
ELSE
go to Step 2
Step 2. Let Jf = r(l +a)sj/dmaxhjl
341
dj = r(l +O:)Sj/ N*hjl
Step 3. IF 11j d
min
go to Step 4
ELSE
go to Step 5
Step 4. Let N, = N*
go to Step 6
Step 5. Let d
j
=0
N, =F(sj)
Step 6. IF j < n
let j = j + 1
go to Step 1
ELSE STOP.
Step 1 checks the stack height to determine whether the item
should be assigned to rack storage. The optimal row depth is
determined in Step 2. Step 3 checks the optimal row depth to
determine if the item should be assigned rack storage. Step 4
determines the number of storage locations needed for the
optimal row depth. Step 5 determines the number of storage
locations needed for rack storage. The counter is incremen-
ted in Step 6.
For each item, the row depth algorithm determines the
minimum number of storage locations needed for floor
stacking and then decreases the row depth until it is
necessary to add a storage location. The minimum row
depth that does not cause' an increase in the number of
storage locations is assigned to the item. This heuristic
accomplishes two objectives. First, minimizing the num-
ber of storage locations needed to store items maximizes
the number of different items that can be stored in a
single zone. Thus, the most desirable storage zones can
hold larger varieties of items. Secondly, minimizing the
number of storage locations per item increases row
depths. As a result, fewer aisles are needed and floor
space utilization is increased.
The following steps summarize the activities in Phase
2:
1. Collect the necessary data for n items requiring
storage.
2. Apply the row depth algorithm to obtain:
(a) the optimal row depth for each item d
j
;
(b) the number of storage locations needed to
store each item N].
Phase 3: Allocate floor space
The third phase of the procedure is to allocate floor
space to classes on the basis of storage medium, required
number of storage locations, and throughput. The
throughput tj for j = 1, ... ,n items is measured by the
number of pallets stored and retrieved in a given time
period. For each storage medium, items (or lot numbers)
are ranked according to the ratio of throughput tj to
storage requirement N], denoted as R
j
. The items wi th the
highest R
j
for a given storage medium are assigned to the
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342
most desirable storage zones such that the storage zone
capacity L is not exceeded. It is assumed that the length
of the storage zone L, measured in storage slots (loca-
tions), determines the capacity of the zone.
The heuristic classification algorithm provides the
same solution that would be obtained by solving the
linear programming relaxation of the knapsack problem
and rounding the fractional assignment to zero. The
knapsack can hold only a given weight and, thus, the
problem is to maximize the value of material in the
knapsack while not exceeding the weight constraint. For
the problem considered here, the value of storing a
particular item is equal to its throughput tj and the
weight is equal to the storage space N, required. For
each storage medium, the algorithm solves successive
knapsack problems until all items requiring that storage
medium are assigned to a storage zone. The classification
algorithm provides the classes C
k
(k = 1, ... ,m), the
number of storage locations required for the class Ii,
and the storage medium (i.e., row depth) Dk correspond-
ing to class k. In addition to what was previously
introduced, the following notation is used in the classi-
fication algorithm:
Ij throughput for item U= I, ... , n);
N, storage requirement for item U= I, ... , n);
R
j
ratio of throughput to storage requirement;
'j rank of item U= I, ... ,n);
L length of storage zone in number 0' storage
locations (i.e., capacity);
k index for class;
C
k
set of items in class (k = 1, ... ,m);
lk number of storage locations required for class
(k= L ... ,m);
Dk storage medium (i.e., row depth) for class
(k = I, ... , m).
Classification algorithm:
INPUT: n, t) (j = 1, ... ,n), N) U= 1, ... ,n), ~
(j = 1, ... In), L, d
max
OUTPUT: Rj; 'j, Ck (k = I, ... ,m), Dk (k = I, ... , m), I
k
(k = I, ... ,m)
Step O. Let k = 0
Step 1. FOR} = 1 to n
Let R, = IjlN,
Step 2. FORj= 1 to n
rank R
j
in descending order
Let 'j = rank of item j
Step 3. FOR I = 0 to d
max
Let k = k + 1
Ck= 0
lk =0
FOR i = 1 to n
FORALL j such that 'j = i AND d
j
= I
(a) IF t, +N
j
s L
Let c, = c, Uj
Larson et al.
lk = lk +Nj
k ~
(b) IF t, +N
j
> L
Let k = k + 1
Ck=0
t, = 0
go to (a)
Step 4. STOP
Step 1 calculates the ratio of throughput to storage require-
ment for each item. The items are ranked in descending
order of the ratio in Step 2. Step 3 fills up the storage zones
(i.e., classes) as needed for each row depth (i.e., storage
medium).
The classification algorithm assigns items to classes
. such that the capacity of the corresponding storage zone
is not exceeded. In fact, it is quite probable that each
zone will contain a small number of unused storage
locations. This is a result of not allowing items to be
assigned to multiple classes and not attempting to solve
the knapsack problem optimally. However, because a
class-based storage policy is being implemented, it is
not discouraging to have a small number of unused
storage locations in each storage zone to accommodate
fluctuations in inventory level. Recall that within each
storage zone material is stored randomly; thus, a certain
amount of 'overflow' space is desirable.
The final step in the class-based layout procedure is to
prioritize the classes for floor space allocation. Once
again, items are ranked according to the ratio of through-
put to storage requirement R]. The average class rank RZ
is determined as follows:
1. Calculate R
j
for each item (j = 1, . . . , n).
2. Rank the items in descending order, where T
J
IS
the rank of item j.
3. Calculate the class rank for each class k:
R; = L Tj IICkl,
Vj E Cit
where ICkl is the cardinality of the set of items in class k.
The layout of the warehouse is constructed by placing
storage zones corresponding to the classes with the two
lowest average class ranks adjacent to the primary aisle,
which was determined in Phase 1. Additional storage zones
and primary aisles are assigned to the layout according to the
average class rank, the storage medium for each class, and
the dimensions of the facility (see the case study in Section
4).
The following steps summarize the activities in Phase
3:
l , Apply the classification algorithm to determine
the folJowing:
(a) the class assignments for items (i.e., storage
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Heuristic approach to warehouse layout 343
} 5-dl:eprow
Column
(storage location)
Slot
t
i s l e ~
1. Stack height (in pallets) for each brand-code hj.
2. An average inventory level for each brand-code Sj.
3. Throughput (i.e., number of cases stored and
retrieved during a 14 week period) of each
brand-code tj.
4. Pallet, rack, and aisle dimensions.
5. A CAD drawing of the current layout of the
warehouse.
} J-deep row
Pallet
/

A 'snapshot' of the current inventory was used to approx-

imate average inventory levels. Although the data were
assumed to be representative of storage requirements, it is
recognized that the static model used does not capture the
dynamic behavior of inventory levels. However, the class-
based heuristic approach to warehouse layout provides the
flexibility needed to accommodate the dynamic behavior of
inventory levels, given a good static approximation of
inventory.
To determine the desired measure for throughput, the
flow of the customer warehouse process was considered.
Once product is received, lift trucks transport it to
storage one pallet at a time. Product remains in storage
until it is needed in a case-pick station. At that time, an
entire pallet of product is transported to case-pick, which
was out of the scope of the study. Therefore, whole
pallets are stored and retrieved one by one. Thus,
throughput was measured in the number of pallets per
week. This value was obtained by knowing the demand
in case-pick for each brand-code (which came from the
number of cases shipped per week) and assuming that
steady-state levels of inventory existed for each brand-
code.
Two types of storage were considered in the ware-
house, racks and floor stacking. Two racks (or two zones
of floor storage) could be placed back to back, without
being separated by an aisle. Racks had three tiers and a
capacity of eight pallets per rack; the bottom tier could
hold pallets stacked two high and the second and third
tiers could not hold stacked palJets. Several important
zone assignments) C
k
;
(b) the storage medium for each class (i.e., row
depth) Di;
(c) the number of storage locations required for
each class h.
2. Prioritize classes according to average class rank
s;
3. Construct layout by adding storage zones corre-
sponding to classes and additional primary aisles.
4. Case study of a pallet storage and retrieval system
The procedure presented in Section 3 was motivated by
several warehouse systems observed by the authors in a
variety of industries. In this section, an industrial case
study is presented to illustrate the class-based storage
procedure for warehouse layout.
4.1. Background
The company of interest is a manufacturer of personal
hygiene products with facilities throughout the USA. The
warehouse studied is a stand-alone facility that is adja-
cent to one of the company's regional manufacturing
sites. Initially, the building was used for consignment
warehouse operations, in which whole pallets were
stored and shipped to internal and external customers.
The proposed use of the facility was for customer ware-
house operations, in which case picking and custom
packaging would be performed for external customers.
To convert the facility from a consignment warehouse to
a customer warehouse, two options were being consid-
ered. For the first option, the current zones and aisles
could be used, which would minimize conversion costs.
However, there was a strong feeling within the company
that the current layout was not efficient for customer
warehouse operations. The second option was to redesign
the warehouse to make it more suitable for customer
warehouse operations. A redesign of the current ware-
house had to answer the following questions:
1. How much rack storage is needed?
2. What is a suitable row depth for floor stacking?
3. How many zones (and/or aisles) are needed?
4. In what direction should aisles run?
5. What storage policy should be used?
6. What products should be stored on racks?
Storage was required for n = 739 products, referred to as
brand-codes. Product was stored in cases, which were
stored on pallets. The size of a case varied between
brand-codes and, thus, the number of cases per pallet
varied between brand-codes. The predetermined stack
height also varied between brand-codes and ranged from
two to five pallets high. The following information was
collected for the case study:
Fig. 4. Top view of aisles, pallets, rows, columns, and slots.
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344 Larson et a].
Table 2. Important dimensions for the customer warehouse layout
dimensions are listed in Table 2.
Fig. 4 illustrates aisles, pallets, zones, columns, and
slots. Aisle lengths and building dimensions were pre-
determined. Two rows of any depth could be placed back
to back without an aisle. A column could contain from
one to seven slots (determined by the row depth) and
was perpendicular to the adjacent aisle. Only one brand-
code could be stored in each column and, thus, each
column was considered a storage location. A slot is the
smallest unit of floor space and can contain from one to
five pallets depending on the stack height of the brand-
code in the slot.
4.2. Application of the computational procedure
In Phase 1 of the class-based layout procedure, the aisle
layout and dimensions were to be determined. On the
basis of the flow of material through the system, the
initial primary aisle was determined by inspection. Three
rectangular regions were identified for available storage
and the length of proposed storage zones was determined
to be L = 74 slots (i.e., storage locations). The most
. desirable locations for storage were adjacent to the
initial primary aisle. The next most desirable storage
locations were in region 1, region 2, and region 3,
respectively. The initial primary aisle and proposed
Object
Aisle
Pallet
Rack
Column
Slot
Dimensions
14ft wide
4 ft by 4 ft
4 ft by 8 ft (3 tier)
4 ft wide, 4 ft to 28 ft deep
4 ft by 4 ft
storage zones are shown in Fig. 5.
In Phase 2 of the procedure, the storage medium was
determined for each brand-code. The company wanted to
provide two types of pallet storage, three-tier rack
storage and floor stacking. Furthermore, floor stacking
could range from three-deep rows to seven-deep rows.
Row depth was a major concern of the company. The
existing layout provided seven-deep floor stacking
throughout the facility. However, many domain experts,
ranging from lift truck operators to managers, felt that
seven-deep rows throughout the warehouse would be
very inefficient for the customer warehouse operations.
The minimum row depth for floor stacking was deter-
mined to be d
m in
= 3. Therefore, brand-codes with a
calculated row depth less than three were assigned to
rack storage. All brand-codes had stack heights ranging
from two to six pallets, and no minimum stack height
h
min
was established for floor stacking.
The data were downloaded to a spreadsheet program
for implementation of the row depth algorithm. For each
of the 739 brand codes, the algorithm calculated the
minimum row depth required to store the average in-
ventory (plus an Q = 250/0 allowance for honeycombing)
in the minimum number of storage locations. The fol-
lowing is one iteration of the row depth algorithm for
brand code j = 372:
INPUT: n =739, h
372
= 3, 5372 = 8, a = 0.25, h
min
=2, d
max
= 7, d
min
= 3
OUTPUT: N
372
, d
372
Step J. Since h
372
" > h
min
go to Step 2
Step 2. Let N* = r{l +a)sj/dmaxhjl
= r(l + 0.25)(8)/(7)(3)1 = I
d
372
= r(l + Q)Sj/ N
th
j1
= f(1 +0.25)(8)/(1)(3)1 = 4
Step 3. Since d
372
> d
min
go to Step 4
Step 4. Let N372 = 1
I
J
I
I
Utilities
I
Available
I
I storage
I
I
region 2
I I
I
II
I
J
I
Initial primary aisle
Output
Proposed storage zone
I
point
I Available
.. L =74 slots
I
storage
(i.e .. storage locations)
-..,
Case-nick
II
region 3
I department
II
Available
I
J
1
storage
I
IL
region I
...J
Input
point
Fig. 5. Initial primary aisle and proposed storage zone dimensions.
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Heuristic approach to warehouse layout 345
Table 3. Summary of classes for each storage medium
Storage medium Number of classes Number of Percentage of Number ofpallets Percentage ofpallets
brand-codes brand-codes
3-tier racks 2 417 57 1190 11
3-deep floor 2 98 13 803 8
4-deep floor 1 59 8 887 9
5-deep floor 2 72 10 1506 14
6-deep floor 2 39 5 1513 14
7-deep floor 4 54 7 4705 44
Total 13 739 100 10604 100
Table 5. Floor space requirements for alternative layouts
Layout Rack storage Floor stack Aisle space Total space
space storage space required (If) required (If)
required (If) required (If)
4.4. Comparison of existing and proposed designs
To justify the proposed warehouse layout, it was com-
pared with the existing layout of the facility. As stated
earlier, the existing layout consisted exclusively of
seven-deep floor stacking and primary aisles were ar-
ranged perpendicular to the proposed layout. Limited
rack storage was available for 800 pallets. Furthermore,
a random storage policy was suggested for the existing
layout.
The layouts were compared on the basis of floor space
utilization and material handling effort. Table 5 shows
the floor space required to store all 739 brand-codes in
each warehouse. The current layout provided less rack
4.3. Computational results
The resulting layout required 13 storage zones for the 13
classes of brand-codes. The priority and dimensions of
each storage zone are listed in Table 4. A letter (i.e., A,
B, C, etc.) was added to the name of each storage zone
to distinguish between multiple zones (and classes) of
the same storage medium. Zone dimensions are given in
floor slots, where a floor slot is 4 ft by 4 ft.
The storage zones were allocated floor space accord-
ing to the priority listed in Table 4. The most desirable
locations were adjacent to the initial primary aisle (see
Fig. 5). After allocation of floor space to zones 'Rack A'
and '3-deep A' zones were allocated floor space in
region 1 and region 2, respectively. This method of floor
space allocation reduces travel distance for single-com-
mand storage or retrieval operations to higher priority
classes. The proposed layout is shown in Fig. 6.
126736
104784
32816
29008
90720
71040
3200
4736
Current
Proposed
Table 4. Storage zones for warehouse layout
Priority Zone name Zone length (L) Zone depth (DJ
1 RackA 74 slots (296 ft) 1 slot (4 ft)
2 3-deepA 74 slots 3 slots
3 5-deepA 74 slots 5 slots
4 7-deepA 74 slots 7 slots
5 6-deepA 74 slots 6 slots
6 4-deepA 74 slots 4 slots
7 7-deepB 74 slots 7 slots
8 7-deepC 74 slots 7 slots
9 3-deepB 74 slots 3 slots
10 5-deepB 74 slots 5 slots
11 6-deepB 74 slots 6 slots
12 7-deepD 74 slots 7 slots
13 RackB 74 slots 1 slot
Phase 3 of the procedure allocated floor space to classes
based on storage medium (i.e., row depth), required number
of storage locations, and throughput. The ratio R
j
was
calculated" for each brand-code, and the brand-codes were
ranked in descending order for each storage medium.
Classes were fanned for each storage medium by adding
brand-codes until the number of storage locations required
for the class Ik exceeded the storage zone capacity L = 74.
A rack consumed two slots of floor space (equivalent to two
storage locations of floor stacking) and provided six storage
locations, each of which could contain one pallet. Thus,
classes of rack storage were formed by adjusting L for the
brand-codes assigned to rack storage (i.e., row depth clj < 3).
The classification algorithm generated 13 classes of brand-
codes, based on storage medium and the ratio R
j
. The
average class rank Ric was determined for each of the 13
classes. Table 3 summarizes the classes for each storage
medium.
go to Step 6
Step 6. Since 372 < 739
Let j = j + I =372 + 1 = 373
go to Step 1
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346
Utilities
I
I
I Avai lable I
I storage I
I region) I
I I
I . I
L I
Receiving
dock
,.-------------..,
I
Excess floor space
I ----- -.J
1IIIIIIJIIIIIllIIIflIIII1
11IlI11JIHII;'111111111Illl!ll:!!lill11111l1!:illliilll!11111111111H11!l1111!!lm:!llllfllllllll
ease-pick
department
Larson et al.
Fig. 6. Proposed layout of the warehouse.
storage than the proposed layout. However, the proposed
layout drastically decreased the effects of honeycomb-
ing. As a result, the overall floor space requirement
(including aisles) was much less for the proposed ware-
house. .
To compare material handling effort, a random mix of
20 brand-codes was selected. The average weekly
throughput (i.e., the number of pallets stored and re-
trieved) was obtained for each brand-code. For the
current Jayout, the storage location for the brand-code
was randomly generated, and the distance traveled to
store and retrieve a pallet was measured. The distance
traveled to store and retrieve a pallet in the proposed
system was determined by the location of the storage
zone corresponding to the brand-code's class. Table 6
summarizes the average weekly distance traveled to store
and retrieve the 20 randomly selected
Table 6. Average weekly distance traveled to store and retrieve 20 randomly selected brand-codes
Brand-code Average throughput Current storage and Current average weekly Proposed storage and Proposed average weekly
(pallets) retrieval distance (ft) distance (ft) retrieval distance (ft) distance (ft)
I 1.67 746 1246 422 705
2 6.56 854 5602 364 2388
3 4.36 433 1888 309 1347
4 50.67 739 37445 249 12617
5 2.48 791 1962 389 965
6 1.64 841 1379 415 681
7 4.33 427 1849 359 1554
8 1.51 787 1 188 543 820
9 13.84 795 11003 321 4443
10 35.68 549 19588 399 14236
11 5.29 456 2412 340 1799
12 1.27 112 142 214 272
13 4.00 430 1720 278 1112
14 1.82 765 1392 521 948
15 22.97 467 10727 329 7557
16 18.93 481 9105 355 6720
17 4.13 441 1821 299 1235
18 11.59 427 4949 293 3396
19 1.34 577 773 509 682
20 3.00 915 2745 537 1611
Total 197.08 12033 118936 7445 65088
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Heuristic approach to warehouse layout
4.5. Discussion of results
The proposed warehouse layout drastically improved on
the current layout. The total floor space required to store
all 739 brand-codes was decreased from 126736 ft2 to
104784 ft2, or 17%. The average weekly distance tra-
veled by lift truck to store and retrieve pallets for the
random mix of 20 brand-codes was decreased from
118936 ft to 65088 ft, or 45%.
The floor space reduction was attributed to a decrease
in honeycombing. Rather than floor stacking all material
in seven-deep rows, a variety of row depths were
provided in the proposed layout. The proposed layout
also provided additional rack storage to hold the 57% of
brand-codes that would be inefficiently stored in floor
stacking.
The material handling reduction was attributed to the
use of the class-based storage policy. Brand-codes were
assigned to classes according to throughput. Therefore,
bra.nd-codes were assigned to higher priority
classes which, In tum, were assigned to the most desir-
able storage zones (i.e., the storage zones that minimized
the travel distance from input point to output point).
The proposed layout was presented to the company.
Although the savings in floor space and material hand-
ling were attractive to management, a concern was raised
about the extra effort needed to manage a class-based
system. Because a relatively small number of storage
zones were identified, and within each zone material
would be stored randomly, class-based storage would
be relatively easy to implement. Each lift truck was
already equipped with a bar-code scanner and database
link. Thus, one alternative was to scan the lot and have
the database return the class and storage zone of the
pallet. Another alternative was to replace an unused
character in the current brand-code with a character
storage zone for the pallet. However,
WIth the projected savings in floor space and material
the company was ,in a position to justify
facility and system conversion costs.
5. Conclusion
This paper presented a class-based storage procedure for
layout. The method is targeted at practitioners
of single-command lift truck pallet storage and retrieval.
Three phases of the procedure were outlined: Phase 1
d.eterrnination of aisle layout and storage zone
Phase 2, assignment of material to a storage
medium; and Phase 3, allocation of floor space. Two
algorithms were provided for determining floor stack row
depth and assigning items to classes. An industrial case
study illustrated the procedure for a warehouse required
to store 739 different products totaling more than 10000
pallets of material. A new layout was developed' and
347
compared to the existing alternative. The proposed lay-
out offered savings of more than 20000 square feet of
floor space and an approximately 45% reduction in
material handling distance for a random mix of products.
Several assumptions were stated for bounding the
problem addressed in this paper. Although the method
is easily generalized to accommodate most practical
problems, the domain of application presented is some-
what limited. Therefore, it is necessary to provide
several suggestions for extending the procedure to more
complex warehouse layout problems. The assumption of
a rectangular warehouse is only necessary to simplify the
selection of an initial primary aisle. If the warehouse is
not rectangular, it should then be partitioned into the
minimum number of rectangular sections. The initial
primary aisle would satisfy the selection rules in Phase
1 and traverse each of the rectangular sections. Care
must be taken to define accurately the length of each
storage zone adjacent to the primary aisle. If the ware-
house has multiple input and/or output points, the defini-
tion of the initial primary aisle must, once again, be
In this case, it is necessary to define primary
Input and/or output points (most probably based on
volume). The initial primary aisle would then connect
the input point to the primary output point
according to the rules defined in Phase 1 of the proce-
dure. Secondary aisles would branch out to the remain-
points, bisecting zones along the
pnmary aisle. As classes are formed and floor space is
allocated in Phase 3, the input and output points for each
item being stored are considered. The classification
algorithm can be extended to prevent the next item in
the list from being added to a storage zone if
the zone IS not on the path from its input point to its
output These .extensions are relatively simple to
apply WIthout loss of generality.
The procedure can also be extended to accommodate
varying pallet sizes. Recall that the row depth (i.e.,
storage medium) is determined independently of the
pallet size. Therefore, the pallet size can be considered
as an additional constraint in the classification problem.
As items are allocated to storage zones, the
could check to verify the appropriate pallet
size. If the pallet size differs from that stored in the
current zone, the item remains on the list for allocation
to a different zone.
Future research will elaborate on issues such as multi-
ple . points, alternative' material handling
devices, varying pallet sizes, stochastic inventory levels
and throughput, and periodic reclassification of items.
Nevertheless, the procedure provided in this paper pro-
vides a foundation for a warehouse layout method that
has displayed encouraging results in practice.
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348
Acknowledgement
This research has been partly funded by the national
Science Foundation (Grant No. DDM-9215259) and
Procter and Gamble Company.
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Handling Engineering (April), 68-69.
17. Ross, P. (1993) The basics of pallet storage systems: part 2. Material
Handling Engineering (May), 61-63.
Biographies
Nick Larson is a Research Assistant and Ph.D. candidate in the
Department of Industrial Engineering at the University of Iowa, Iowa
City, Iowa. He received a B.A. degree in physics from Central College)
Pella, Iowa, in 1991 and an M.S. degree in industrial engineering from
the University of Iowa in 1993. His research interests include intelligent
systems, concurrent engineering, reengineering design and manufactur-
ing processes, and modeling material handling systems. He is a member
of lIE, INFORMS, and Alpha Pi Mu.
Heather March is working with Hon Industries. lnc., In Muscatine,
Iowa. At the time of the research project she was enrolled in the
Graduate Program in Industrial Engineering at the University of Iowa.
She is interested in manufacturing and distribution systems.
Andrew Kusiak: is a Professor in the Department of Industrial Engineer-
ing at the University of Iowa, Iowa City, Iowa. He is interested in
engineering design and manufacturing. Dr. Kusiak has authored and
edited numerous books and published research papers in journals
sponsored by vanous societies, including AAAI, ASME, IEEE, liE,
INFORMS, and SME. He serves on the editorial boards of a number of
journals, edits book series, and is the Editor-in-Chief of The Journal of
Intelligent Manufacturing.
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