Increasing Efficiency of Pallet Racking in Warehouse: A Case Study of a Complete Logistics Company

Abstract

The objective of this research is to increase the efficiency of the storage area utilization of a case study company; also it considers the purchasing additional devices worthy. From the case-study data between January and December 2018, the number of pallets is calculated, then it is used to predict the storing needs in the future. Four methods including Moving Average, Simple Exponential Smoothing, Double Exponential Smoothing, and Trend Project are conducted to consider in comparison. Mean Absolute Deviation, Mean Absolute Percent Error, and Mean Square Error are criterions of the forecasting methods selection. In the product data clustering, to group according to the ability of overlaying is the most appropriate method. As a result, Moving Average is suitable for the data of product that cannot be overlaid, while Simple Exponential Smoothing is used for the data of product that can be overlaid. The forecast value of the number of pallets is used to evaluate storage space. Consecutively, the alternatives of installing additional shelves will be determined. The decision tree method is used to analyze and to define the most appropriate alternative, and the principle of economics is conducted to consider the investment worth. The results show that the most suitable alternative is to install one normal-sized shelf with the total cost is 150,450 baht. Net present value (NPV) is 128,317.70 baht. Internal Rate of Return (IRR) is equal to 16.26 percentages. The Breakeven point (BP) is at 558 pallets. The Payback period is about 5 years and 6 months.