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Optimal Sizing of In-Plant and Leased Storage Spaces under a Randomized Storage Policy  

Lee, Moon-Kyu (Department of Industrial and Systems Engineering, Keimyung University)
Publication Information
Journal of Korean Institute of Industrial Engineers / v.30, no.4, 2004 , pp. 294-300 More about this Journal
Abstract
This paper considers a trade-off effect between in-house storage space and leased storage space in generic warehouses operated under a randomized storage assignment policy. The amount of in-house storage space is determined based on the law of large numbers satisfying a given service level of protection against space shortages. Excess space requirement is assumed to be met via leased storage space. A new analytic model is formulated for determining the excess space such that the total cost of storage space is minimized. Finally, computational results are provided for the systems where the standard economic-order-quantity inventory model is used for all items.
Keywords
warehouse leasing; storage capacity; randomized storage policy; optimization;
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