Integration of returns and decomposition of customer orders in e-commerce warehouses

In picker-to-parts warehouses, order picking is a cost- and labor-intensive operation that must be designed efficiently. It comprises the construction of order batches and the associated order picker routes, and the assignment and sequencing of those batches to multiple order pickers. The ever-increasing competitiveness among e-commerce companies has made the joint optimization of this order picking process inevitable. Inspired by the large number of product returns and the many but small-sized customer orders, we address a new integrated order picking process problem. We integrate the restocking of returned products into regular order picking routes and we allow for the decomposition of customer orders so that multiple batches may contain products from the same customer order. We thereby generalize the existing models on order picking processing. We provide Mixed Integer Programming (MIP) formulations and a tailored adaptive large neighborhood search heuristic that, amongst others, exploits these MIPs. We propose a new set of practically-sized benchmark instances, consisting of up to 5547 to be picked products and 2491 to be restocked products. On those large-scale instances, we show that integrating the restocking of returned products into regular order picker routes results in cost-savings of 10 to 15\%. Allowing for the decomposition of the customer orders' products results in cost savings of up to 44\% compared to not allowing this. Finally, we show that on average cost-savings of 17.4\% can be obtained by using our ALNS instead of heuristics typically used in practice.

[1]  Gülgün Alpan,et al.  Warehouse performance measurement: a literature review , 2015 .

[2]  Iris F. A. Vis,et al.  Time-restricted batching models and solution approaches for integrated forward and return product flow handling in warehouses , 2013, J. Oper. Res. Soc..

[3]  Birger Raa,et al.  Using a TSP heuristic for routing order pickers in warehouses , 2010, Eur. J. Oper. Res..

[4]  Ruud H. Teunter,et al.  The distribution-free newsboy problem with resalable returns , 2003 .

[5]  Arjan S. Dijkstra,et al.  Order picker routing with product returns and interaction delays , 2017, Int. J. Prod. Res..

[6]  Juan José Salazar González,et al.  A branch-and-cut algorithm for a traveling salesman problem with pickup and delivery , 2004, Discret. Appl. Math..

[7]  René B.M. de Koster Marisa P. de Brito,et al.  Return handling: an exploratory study with nine retailer warehouses , 2002 .

[8]  Helena Ramalhinho Dias Lourenço,et al.  Iterated Local Search , 2001, Handbook of Metaheuristics.

[9]  An Caris,et al.  Designing efficient order picking systems by combining planning problems: State-of-the-art classification and review , 2017, Eur. J. Oper. Res..

[10]  Abraham Duarte,et al.  General Variable Neighborhood Search for the Order Batching and Sequencing Problem , 2017, Eur. J. Oper. Res..

[11]  Kees Jan Roodbergen,et al.  Coordinating technician allocation and maintenance routing for offshore wind farms , 2018, Comput. Oper. Res..

[12]  Marc Goetschalckx,et al.  Research on warehouse operation: A comprehensive review , 2007, Eur. J. Oper. Res..

[13]  Kees Jan Roodbergen,et al.  Design and control of warehouse order picking: A literature review , 2006, Eur. J. Oper. Res..

[14]  Stephen C. Graves,et al.  Benefits of Reevaluating Real-Time Order Fulfillment Decisions , 2009, Manuf. Serv. Oper. Manag..

[15]  A.J.R.M. Gademann,et al.  An order batching algorithm for wave picking in a parallel-aisle warehouse , 2001 .

[16]  Hoda Davarzani,et al.  Toward a relevant agenda for warehousing research: literature review and practitioners’ input , 2015, Logist. Res..

[17]  Ying-Chin Ho,et al.  Order-batching methods for an order-picking warehouse with two cross aisles , 2008, Comput. Ind. Eng..

[18]  NOUD GADEMANN,et al.  Order batching to minimize total travel time in a parallel-aisle warehouse , 2005 .

[19]  C. D. Gelatt,et al.  Optimization by Simulated Annealing , 1983, Science.

[20]  René M. B. M. de Koster,et al.  A review on stochastic models and analysis of warehouse operations , 2011, Logist. Res..

[21]  Nils Boysen,et al.  Manual order consolidation with put walls: the batched order bin sequencing problem , 2018, EURO J. Transp. Logist..

[22]  Xiangpei Hu,et al.  Multi-warehouse package consolidation for split orders in online retailing , 2021, Eur. J. Oper. Res..

[23]  Hing Kai Chan,et al.  Improving the productivity of order picking of a manual-pick and multi-level rack distribution warehouse through the implementation of class-based storage , 2011, Expert Syst. Appl..

[24]  Mu-Chen Chen,et al.  Aggregation of orders in distribution centers using data mining , 2005, Expert Syst. Appl..

[25]  W. H. M. Zijm,et al.  Warehouse design and control: Framework and literature review , 2000, Eur. J. Oper. Res..

[26]  Kees Jan Roodbergen,et al.  Routing order pickers in a warehouse with a middle aisle , 2001, Eur. J. Oper. Res..

[27]  Yin-Yann Chen,et al.  An efficient hybrid algorithm for integrated order batching, sequencing and routing problem , 2015 .

[28]  Daniel Schubert,et al.  Order picking with multiple pickers and due dates - Simultaneous solution of Order Batching, Batch Assignment and Sequencing, and Picker Routing Problems , 2017, Eur. J. Oper. Res..

[29]  Thibaut Vidal,et al.  New benchmark instances for the Capacitated Vehicle Routing Problem , 2017, Eur. J. Oper. Res..

[30]  Alexandre Salles da Cunha,et al.  Optimally solving the joint order batching and picker routing problem , 2017, Eur. J. Oper. Res..

[31]  H. D. Ratliff,et al.  Order-Picking in a Rectangular Warehouse: A Solvable Case of the Traveling Salesman Problem , 1983, Oper. Res..

[32]  Verena Schmid,et al.  Metaheuristics for order batching and sequencing in manual order picking systems , 2013, Comput. Ind. Eng..

[33]  Yeming Gong,et al.  Approximate Optimal Order Batch Sizes in a Parallel aisle Warehouse , 2009 .

[34]  Gur Mosheiov,et al.  The Travelling Salesman Problem with pick-up and delivery , 1994 .

[35]  Sebastian Henn,et al.  Order batching and sequencing for the minimization of the total tardiness in picker-to-part warehouses , 2015 .

[36]  M. B. M. de Koster,et al.  Efficient orderbatching methods in warehouses , 1999 .

[37]  Xuanming Su,et al.  Consumer Returns Policies and Supply Chain Performance , 2008, Manuf. Serv. Oper. Manag..

[38]  Kees Jan Roodbergen,et al.  Routing methods for warehouses with multiple cross aisles , 2001 .

[39]  James J.H. Liou,et al.  Using a multiple-GA method to solve the batch picking problem: considering travel distance and order due time , 2008 .

[40]  Gino Marchet,et al.  Investigating order picking system adoption: a case-study-based approach , 2015 .

[41]  David Pisinger,et al.  An Adaptive Large Neighborhood Search Heuristic for the Pickup and Delivery Problem with Time Windows , 2006, Transp. Sci..

[42]  Kees Jan Roodbergen,et al.  A survey of literature on automated storage and retrieval systems , 2009, Eur. J. Oper. Res..

[43]  Nils Boysen,et al.  Warehousing in the e-commerce era: A survey , 2019, Eur. J. Oper. Res..