Computers ind. Engng Vol. 29, No. 1-4, pp.

361-365, 1995
Copyright 1995 Elsevier Science Ltd
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Conceptual Design of a Wanehmme for

Jmt-ln-Time Operatiom in a Bakery

Gilles Comfier, Ph.D., P.Eng.,

Assistant Professor oflndustrial Engineering,
Universit~ de Moncton

David F. Kersey, B.I.E., PEng.,

Senior Industrial Enginee~
Whitman Benn and Associates

Abstract [3]. Problems can generally be classified as

This paper outlines some analysis and design
principles for a central distribution facilityto
support a just-in=time(YI.T) operatingphiloso-
pity, derived from a case study at a large bakery.
Varioes facets of the study are presented, in-
cluding the determination of storage and
throughput requirements, a conceptual ware-
house layout, and an economic analysis. The
paper concludes with a description of an alter-
native design as well as a retrospective discus-
sion on the potential use of operations research
and computer simulation in such a study.
llaciqlmund and Objective
Product previously had to be staged by route as
it comes off the production line; consequently,
there was little opportunity for changes to cus-
tomer orders once the production cycle had be-
gun. The ability to build up the delivery routes,
and the individual orders that make up these
routes, at the latest possible thne would give the
marketing and distribution staff the option to
make a late adjustment to the individual cus-
tomers order. This would translate into reduced
stales (given the perishable nature of the prod-
uct), reduced lead time, and ultimately ini-
proved quality and service.
The objective of the industrial engi-
neering study was to devise on operating proce-
dure and facility design to satisfy this J.I.T. op-
erating requirement, and to demonstrate the
economic feasibility o f the proposed conceptual
plan.
Literature Review
Literature on optimization of warehouse design
and operation is reviewed by Cormicr mad Gram
pertaining to throughput capacity, storage ca-
pacity or facility design. The ultimate goal in
this project is design, but this of course entails
first establishing throughput as well as storage
capacity requirements.
Most of the warehouse design literature
deals with automated storage and retrieval sy s-
tems (AS/RS's), and hence does not apply to the
problem at hand. Exceptions are Bass~ et ~d.
[1], who compare alternative shelf arrange-
meats, and Park and Webster [12], who compare
alternative warehousing systems based upon
control procedures, handling equipment move-
ment, storage assignment rules, input and output
patterns for product flow, storage rack slructure,
component costs and the economics of each
storage system.
Throughput capacity models aim to ei-
ther minimize a function of material handling
costs, e.g, Malmborg and Deutsch [ 10], Bozer et
al. [2], or else to establish a system's throughput
performance as a function of its configuration
and operating rules, e.g., Han et aL [8], Seid-
mann [14], Elsayed and Unal [5], Foley and
Frazelle [6].
In the category of storage capacity,
Rosenblatt and Roll [13] used simulation to de-
termine the effect of various factors on the
service level of a warehouse. Cormier and
Gunn [4] consider jointly warehouse sizing,
contract warehousing and inventory policy.
Multi-period warehouse leasing problems were
considered by White and Francis [15], and by
Lowe et al. [9]. Finally, block stacking can be
used for storing palletized product without
racks, e.g., bread stacks. Since a storage lane
cannot be used again until its current content
has been depleted, methods have been proposed
to optimize lane depth (Marsh [11], Goct-
schalckx and Ratliff[7]).

361
362 17th International Conference on Computers and Industrial Engineering
Operating Requiremeals
We point out that a bakery warehouse is rather
peculiar in the sense that the stored product,
e.g., bread, is highly perishable. This translates
into the main design objectives, which essen-
tially are to store and handle everything the
plant produces within a daily time frame.
Floor space must be allocated to prod-
uct storage, staging of both highway and local
routes, shipping and receiving, storage of re-
turned trays, and clearances for the material
handling system. Some of these are discussed
below.
A survey o f past production reports
yielded a peak storage requirement of 1200
stacks. Furthermore, an ABC analysis revealed
that 5% of the items account for approximately
50% of the area requirements and comprise
class A, 15% of the items account for about
30% of the area requirements and belong to
class B, while 20% of the area requirements can
be attributed to the remaining 80% of the items
forming class C. This finding has a significant
bearing on storage location assignment due to
the need for 100% stock selectivity. Note that it
is not always necessary for a warehouse to ac-
commodate the entire peak storage demand; for
instance, space may be leased from an outside
supplier on a temporary basis. Howevm; the
client imposed that this option not be considered
here, as 90% of space would still be utilized
about a quarter of the time.
Receiving and shipping area require-
meats are directly related to the number of
docks. Note that the warehouse is located away
from the plant due to space and zoning restric-
tions, so that eleven highway trailers arrive at
the warehouse over a sixteen hour production
cycle (6:00 p.m. - 10:00 a.m.). Given that each
trailer takes two hours to load/unload, the num-
ber of docks needed is 11 trailers x 2 dock-hours
per trailer / 16 hours = 1.4, say 2. Since the
production cycle ends before order picking be-
gins, the same docks are then used to load trail-
ers making long-haul deliveries. Moreover,
product must also be staged for local deliveries,
and in order to best utilize floor space one small
route is combined with one large route.
Throughput requirements for both man-
power and material handling system (including
trucks) are crucial to the success of J.I.T. They
were deie~trdned using a multiple activity chart
illushailng a 24-honr operating cycle.
win-heine n e ~ a
Based upon the above requirements, a concep-
tual warehouse design was developed and is
presented in Fig. 1. Notice that product classes
A, B, and C are located in different parts of the
warehouse and use different storage configura-
tions.
Since class A items are few and account
for the lmgest proportion of total volume, they
are placed in a block several stacks deep a~und
which circulates an in-floor tow conveyor.
Class B items require moderate selectivity, so
they are placed in a block only a few stacks
deep (four in the figure). We would expect the
most popular among the B items to occupy one
or more of these storage lanes, while the least
popular might be placed two or three per lane,
thereby resulting in some occasional re-
handling. Meanwhile, each stack of class C
items is accessible at all times.
During the production cycle, product
arriving from the plant by tractor-trailer is un-
loaded through the docks located at the bottom
of the figure. These stacks are placed on rite
tow conveyor, which drags them to their desti-
nation in the warehouse. During the order
picking cycle, these stacks are again placed on
the tow conveym; with consecutive stacks be-
longing to the same order (although there are
usually several orders loaded on the same
trailer). Picking for the local routes follows
roughly the same routine.
J m f i l e a t i e a of J.LT. Design
Often times, the implementation of the just-in-
time philosophy merely requires that the com-
pany revise its operating procedures. If this
were the case here, the proposed design could
be justified on the basis of intan~ble benefits
alone. These include:
fresher product on the store shelves;
a reduction in returned and stale items;
an opportunity for the retail stores to change
their orders until just before they are deliv-
ered;
greater brand preference.
Unibrtunately, lack of space for expan-
sion and toe need to modernize the production
facility meant that implementing the proposed
changes would result in expenditures in the o r-
der of several million dollars. A detailed eco-
nomic analysis was thus carried out using a
spreadsheet program. We note that a good por-
tion of tangible cost savings in this project stem
from a consolidation of warehousing operatimls,
leading to reduced supervision, leasing, and
maintenance as well as cheaper utilities. A s-
suming a 20% required before tax rate-of-return
(i), the following equation was solved:
 17th International Conference on Computers and Industrial Engineering 363

i I
I "c I
I items!
i I
I
i Local delivery
staging area
In-floor
tow conveyor -'] I--I
t_J
B items A items

, , ,,--,,
.i
I I I Accumulating conveyors
~-~-T-r-r-e~-I--
" ~'-'" i - T I,.]Tray s ~DW / - L ~ -I I JI - JI - 4 - I L - L - .
-L J-3- 4 r-J I
" - i - - i - q- , HighwaYdockstrailerH Trays ~ _ L _ , ) _ J _ J _, 2 _)L _ ,L _ ,,I
. J - J - - A - 1
I I I , - - I I I I I I I

Figure 1: Wmehouse Layout

NPV=-P+A(P/A,iOVo,N)+SV(P/F,iOYo,N) Given the difficulty of factoring int~-

(1) gible benefits into such a decision, Eq. (1) was
modified by setting NPV=0 and solving for A,
where NPV--net present value; ~-~tial invest- that is:
ment; A=annual cost savings; SV=salvage
value; N=anticipated project life; (P/A,i%,N) A=[P-SV(P/F,i%,b0]/(P/A,i%,N)
--uniform series present worth factor; and (2)
(P/F,i%,N)=single-payment present worth factor
(refer to any engineering economy textbook). Eq. (2) allows us to determine the
We found that the investment yielded a negative amount of annual benefits required to justify an
NPV and thus could not be justified with only investment, whether they be tangible or not.
tangible benefits.
364 17th International Conference on Computers and Industrial Engineering
Letting A=AI~AI, where A~annual tangible
benefits and Ar=annual intangible benefits, it is
thus possible to establish a required dollar
amount for intangible benefits. Hence,
Ar=[P-SV(P/F,i%,N)]/(P/A,i%,N)-AT
(3)
The intangible benefits can also be expressed as
a fraction of tangible benefits, i.e., 100A1/AT. In
the present situation, it turns out that this ratio
must be equal to 35% for a rate-of-return of
20%.
Conclusion
In this pap~ a conceptual warehouse design for
just-in-time operations in a bakery was pre-
sented along with an outline of the underlying
analysis. An alternative to the operating proce-
dures assumed by the layout of Fig. 1 is to store
incoming goods immediately upon their receipt
directly in the local delivery staging area and in
highway trailers (this requires the addition of
some highway ~ e r docks). The advantages of
this alternative are:
a 25% reduction in floor space;
order picking is spread over a longer time
period;
more flexible use of manpower: stock put-
away and order picking functions are per-
formed on the same work shifts.
The main disadvantages are:
access to all routes staged inside highway
trailers must be maintained for the duration
of the production cycle, leading to some
double handling;
since incoming product is not sequenced by
customer order; people will have to run back
and forth between storage locations, i.e., lo-
cal delivery and highway trailer docks, in or-
der to place stock in the right locations.
The use of more sophisticated analysis
techniques was precluded in this study by time
and financial constraints. The paper by Goet-
schalckx and Ratliff [7] gives an excellent de-
scription and literature review of block stacking
problems, and also proposes some algorithms of
potential application to a bakery warehouse.
Moreoveg the complete logistic system, com-
prising the warehousing operation and vehicle
scheduling, can be modeled by computer simu-
lation. This would allow all key design pa-
remeters to be varied, e.g., number of diffemut
storage lane depths, number of docks, and num-
ber and routing of trucks.
ltefeles
[1] Bassan, Y., Roll, Y, and Rosenblatt, M.J.,
"Internal layout design of a warehouse," AIIE
Transactions 12, 4, 317-322 (1980).
[2] Boze~ Y.A., Schorn, E.C., and Sharp, G.P.,
"Geometric approaches to solve the chebyshev
traveling salesman problem," liE Transactions
22, 3, 238-252 (1990).
[3] Cormie~ G. and Gunn, E.A., "A review of
warehouse models," European Journal of Op-
erational Research 58, 1, 3-13 (1992).
[4] Comfier, G. and Gunn, E.A., "On coordi-
nating warehouse sizing, leasing and inventory
poficy," l i e Transactions, To appear.
[5] Elsayed, E.A., and Unal, O.I., "Order
batching algorithms and travel-time estimation
for automated storage/retrieval systems", Inter-
national Journal of Production Research 27, 7,
109%1114 (1989).
[6] Foley, R.D., and Frazelle, E.H., "Analytical
results for miniload throughput and the distri-
bution of dual command travel time," lIE
Transactions 23, 3, 273-281 (1991).
[7] Goetschalckx, M., and Ratliff, H.D.,
"Optimal lane depth for single and multiple
products in block stacking storage systems," l i e
Transactions 23, 3, 245-258 (1991).
[8] Han, M.-H., McGinnis, L.F., Shieh, J.S., and
White, J.A., "On sequencing retrievals in an
automated storage/retrieval system," liE Trans-
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[9] Lowe, T.J., Francis, R.L., and Reinhardt,
E.W, "A greedy network flow algorithm for a
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(1988).
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design," International Journal of Production
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of three-dimensional warehouse systems," In-
ternational Journal of Production Research 27,
6, 985-1003 (1989)
 17th International Conference on Computers and Industrial Engineering 365

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The frst author gratefidly acknowledges finan-

cial support from the Natural Sciences and En-
gineering Research Council of Canada, and by
the Universitk de Monctons Faculty of Gradu-
ate Studies and Research.