An integrated model for the production planning and the allocation of locations to items in a warehouse

In order to enhance efficiency and productivity of large manufacturing organizations, the warehouse is a critical constraint which needs to be properly managed in coordination with other departments in organizations. To date, various policies have been developed for the layout design and assignment problems of warehouses, and their effective implementation requires appropriate mathematical models and decision-making tools. In the present paper, the dedicated storage policy is studied in connection with the production planning problem. In doing so, and by considering the physical constraints of warehouses, a new mixed integer programming model is proposed to minimize the total costs of production and warehousing. Also, an adjacent allocation of storage locations to items is ensured using the lexicographical constraints developed in this paper first. Moreover, due to the complexity of the problem, two customized Surrogate subgradient algorithms as well as a fast heuristic, namely the modified part period balancing, are proposed to solve the model. It is shown that the proposed solution methods are competitive with the common and standard ones, especially when the problem size is increased. The need for the integrated approach is explained by comparing the results of the integrated model with the model investigating the production planning and warehouse design separately. The results in this regard reveal that the more the assignment cost, the higher the effectiveness of the integrated model against the non-integrated one. Moreover, the production capacity and the demand for items are determined as factors that significantly affect the assignment and production decisions.