Proceedings of the 2010 Industrial Engineering Research Conference

A. Johnson and J. Miller, eds.

Guidelines for Design and Operation of a Lean Order-Fulfillment
System
Chia-Ju Lin and Dale T. Masel
Department of Industrial and Systems Engineering
Ohio University
Athens, Ohio 45701 USA
Abstract
Lean methods have been applied in manufacturing to reduce waste, and they also have potential to eliminate waste
in distribution centers, since order fulfillment is essentially an assembly operation. Previous work used a lean
approach to design a system for picking items to fill orders and pack them for shipment creating a system that
assigns each worker to a small zone to eliminate travel and utilizes trays to provide a buffer because of uneven
demand across zones. This paper presents design rules for the system, which consider the expected throughput of the
system and the cost of equipment and labor.
Keywords
Lean, Warehouse, Order Fulfillment, Order Picking
1. Introduction
Order picking is the process of picking items from storage according to customers orders. In a traditional order
picking operation, products are stored on racks or shelves and pickers travel along the aisle to pick items from the
racks or shelves. According to de Koster, et al. [1], order picking cost is the main operating cost in warehouses,
accounting for up to 55% of total operating expense. Traveling is the main activity of order picking operation and it
makes up about 50% of the order pickers time. Due to long travel time in traditional warehouses, lean concepts are
applied to the process of order picking to eliminate non-value- added activities.
Much work has been done to develop improvements to the traditional warehouse design and operations. For
examples of this work, see [2-4]. Much of the research effort has attempted to reduce the amount of a pickers time
that is spent traveling, since this occupies a significant percentage of the pickers time, without adding value for the
customer. Previous research has attempted to accomplish this through better routing of pickers through the storage
area and better assignment of items to storage locations.
The system discussed in this paper, shown in Figure 1, was described by Kong [5]. It includes a fast pick area that
utilizes lean principles in its design, and a traditional area for lower-demand items. The design was developed by
reflecting on how an order picking system could be designed from a lean point of view, rather than looking to make
incremental improvements an existing design. The goal of the fast pick area is to allow the worker to use virtually all
of their time for picking, rather than interrupting their productivity with travel. The zone in the fast pick area is
designed to keep all items that the worker is responsible for within easy reach.
The fast pick area is divided into separate zones and each zone is assigned a picker. The zones are small enough that
pickers do not need to travel to pick items, which can reduce traveling and reduce labor costs. The layout of the lean
order picking system can have a significant effect on order picking, but it could also lead to design and management
problems. In order to avoid these problems, it is important to make correct decisions with regards to the number of
buffer trays and picking zones, and workload scheduling.
Lin and Masel
Figure 1: Schematic of an order picking system with a lean fast pick area
The fast pick area stores the high demand products that pickers retrieve most frequently. It is divided into separate
zones and each zone contains storage rack and buffer trays. The pickers retrieve products from the racks and place
them into buffer trays. A pick-to-light system displays the quantity of products pickers should pick and a put-to-light
system shows pickers which trays to place the products in. Then the buffer trays automatically transfer the products
to shipping cartons as the cartons pass the trays on a conveyor. At the end of the fast pick area, the conveyor splits;
cartons that need items from the traditional area proceed on conveyor II and other orders go directly to shipping on
conveyor I.
The fast pick area would be appropriate for warehouses that store small to medium sized products because the buffer
trays are used in the lean order picking system and the trays have a limited capacity. The capacity of the trays could
potentially be increased to accommodate larger items, but this would also increase the size of the zones and require
more travel by the workers, which this design is attempting to eliminate.
The purpose of the buffer trays is to prevent the workers from having to wait for a carton to arrive. Because pickers
can place items on a buffer tray as soon as theyre picked, they can move on to picking the next items. Without the
buffer trays, the worker would be idle after picking an item, since the arrival of cartons cant be perfectly
coordinated with picking across all of the zones.
Another consideration in lean operations is that batches should be avoided. Often, warehouses will pick items for a
large number of orders in waves or batches, which requires the items to be sorted into individual orders before they
can be packed. In the fast pick system, waves are not used, but it is also not feasible to pick one order at a time, since
there would often be no items required from some of the zones, so the pickers in these zones would be idle.
Therefore, multiple orders are grouped in a batch for assigning the workload to zones, but the pickers still pick one
order at a time in each zone.
The traditional area of the system stores low-demand products on shelves, as in a traditional warehouse. This space
is divided into multiple aisles and each aisle contains several stock-keeping units (SKUs). Pickers travel along aisles
to pick items from shelves and put them on the sorting conveyor. At the end of the sorting conveyor, there are
workers to receive items from the sorting conveyor and place them into buffer trays. It may be possible in some
situations to automate the transfer from the sorting conveyor to the buffer trays, but to handle the variety of product
sizes that would be expected, it is assumed that this transfer is done manually.
This paper provides formulas to calculate the number of zones for a given warehouse to help warehouse designers to
make decisions. The mathematical models can estimate total labor time in the lean order picking system and the
Lin and Masel
expected number of items per batch in the fast pick area, which can be used to determine the time for processing a
list of orders given the number of zones.
2. Mathematical Models
In this paper, it is assumed that each worker has the same walking and picking speed, to simplify the calculation of
total labor time. Another assumption is that travel time in the fast pick area is negligible. Since the fast pick area is
divided into small zones and a worker is assigned to each zone, the workers do not need to walk along aisles to pick
items. They can retrieve items from the rack behind them to easily put them into buffer trays.
2.1 Labor Time
Lean principles are applied to the fast pick area to eliminate waste and enhance performance. An imbalanced
workload between zones will lead to a waste of worker time in the fast pick area. In order to balance the workload
between zones, orders will be grouped into a batch to balance the workload and enhance working efficiency. The
labor time can be calculated by multiplying the number of batches per day, batch limit, and the time spent of picking
one item shown in Equation (1).
T
f
= B M T
pu
Z (1)
where,
T
f
: Labor time in the fast pick area
B: Number of batches in the fast pick area per day
M: Maximum number of items can be assigned in a batch per zone
T
pu
: Mean time to pick one unit
Z: Number of zones
The batch limit is the maximum number of items that can be picked by a single worker in each batch. Observing this
limit when forming batches is important to the coordination of the system. The speed of the conveyor is set so that
the rate at which cartons arrive at a zone is balanced with the rate at which orders are being picked. If the number of
items a worker is assigned exceeds the batch limit, the picker might not get all of the items for an order picked
before the carton for the order reaches their zone.
However, the overall rate at which items are retrieved in the fast pick area is typically less than 1/( Z T
pf
) because
the workload for a most batches cannot be perfectly balanced across all zones. It is not feasible to store all products
in all zones, so the workload per zone for each batch will depend on the particular items that are needed to fill the
orders in that batch. Batches are formed by adding orders to a batch until adding an order. At that point, the batch is
considered complete (since orders cannot be split across batches) and a new batch is begun.
So the labor time calculated in Equation (1) will include some idle time when the number of items to be picked in a
batch for a particular zone is less than M. Determining the number of batches per day depends on the actual number
of items picked per batch across all of the zones. The number of batches is used to determine the total labor time in
the fast pick area, as shown in Equation 1, and will also be used to determine the takt time, which is important in
determining appropriate staffing levels for a given number of orders to be filled.
2.2 Model for Expected Batch Size
A probabilistic model to calculate the expected number of batches per day is shown in Equation (2). The expected
number of items in a batch is obtained calculating the probability that given items with batch limit as shown in
Equation (3). Once the expected number of items in a batch is known, the expected number of batches can be
obtained.
E[B]=

| ]
(2)
E|N] = n P(N = n|N)

(3)
where,
N: Total items picked in a batch
N
o
: Number of orders per day
N
i
: Number of items per order
Lin and Masel
The expected number of items in a batch is based on calculating the probability that given items with batch limit.
The probability of a given number of items being picked in a batch (N) with a given batch limit (M) is calculated by
multiplying the probability by which each of the zones have M items obtains M+1 items and the number of
combination as shown in Equation (4). The formula is to obtain the probability of different batch sizes with a
different number of items. When one of these zones is over batch size, a new batch begins.
( = |) =

,.

)

(

,,

)
(

,.
)( |)
(4)
where,
P
j
: The probability that a randomly selected item needs to be picked from zone j
To evaluate the accuracy of the model, simulated orders were generated and were formed into batches for different
batch limits. The average batch size for the simulated orders was compared to the batch size predicted by equation
(3) and the results are shown in Table 1. All of the calculations assumed that there were three zones. The
comparison shows that the mathematical model predicts a performance similar to the simulation.
Table 1: The expected number of items per batch as predicted by Equation (3) and from simulation
Batch Size
Batch Limit Predicted Simulated
2 3.8 40
3 6.3 6.3
4 8.5 8.7
5 11.0 11.2
2.3 Regression Model for Batch Size
A disadvantage of using Equation (3) to calculate the expected batch size is that due to the large number of possible
combinations to reach M as the number of zones increases, the probability can difficult to calculate. As an
alternative, a regression model was evaluated for calculating the expected batch size for a given number of zones
and batch limit.
The regression model was developed by taking simulated orders and forming batches for different numbers of zones
and batch limits. Then the regression was performed using the batch size from the simulation as the dependent
variables and the number of zones and the batch limit as the independent variables. Through analysis, it was
determined that the interaction between number of zones and the batch limit was statistically significant, so resulting
equation to estimate batch size is shown in Equation (5).
N = 1.63 + 0.635Z 1.11M+ 0.673(Z M) (5)
To evaluate this model for use in determining the batch size, the batch size predicted by Equation (5) was compared
to the batch size from the simulation. The results from the comparison are shown in Table 2.
Table 2: Error using regression equation to predict batch size
Num. Zones Batch Limit (M)
(Z) 2 5 8 11 15 20
2 -30% 2% 11% 11% 10% 11%
4 -46% -6% -2% -1% 1% -1%
8 -44% -2% -3% -1% 0% -5%
12 -42% 2% 4% 0% -1% -3%
20 -41% 9% 5% 4% 0% 0%
The regression model appears to predict the number of items in a batch well except in cases where there is a small
number of zones or a small batch limit. It is believed that the reason for this error is that in these cases, the batch
forming process is more susceptible to imbalance in the distribution of workload. If the batch limit is large or there
are a large number of zones, there is a much smaller chance for a single zone to be assigned enough items in a row
to reach the batch limit before other zones receive their share of items.
Lin and Masel
3. Design Considerations
The models described in Section 2 can be applied to the design of the fast pick area. In determining the correct size
of the fast pick area, the total cost of the system should be considered. This includes both equipment and labor costs,
in both the fast pick and traditional areas. In general, the fast pick area has a much lower labor cost than the
traditional area (due to the elimination of travel), but it has a higher equipment cost.
The number of workers in the facility (from both the fast pick and traditional areas) should be sufficient to meet the
required order fulfillment rates. In the traditional area, it is easy to add workers, since no additional equipment is
needed, but in the fast pick area, each picker needs a zone, so the desired throughput should be considered during the
design phase.
The number of trays in the fast pick area is another issue that should be considered in the design of the fast pick
area. The number of trays can be predicted based on the number of orders in a batch per zone. The number of trays
must be greater than or equal to the number of orders in a batch per zone in order to avoid having no empty trays for
pickers to place items that have been picked.
Table 4 shows the results of the simulation with respect to the frequency with which each zone had the specified
number of orders in a given batch. The shaded cells indicate infeasible values, since it isnt possible for a zone to
have more orders than it is allowed to have items.
Table 4: Order Size Frequency
#
orders/
batch
Batch Limit
2 3 4 5
Zone 1 Zone 2 Zone 3 Zone 1 Zone 2 Zone 3 Zone 1 Zone 2 Zone 3 Zone 1 Zone 2 Zone 3
0 44 31 31 11 12 10 3 2 4 2 1 2
1 62 96 80 32 26 19 15 14 10 8 9 4
2 81 60 76 30 48 51 17 17 13 5 8 12
3 44 31 37 21 38 33 18 13 10
4 28 13 24 18 29 21
5 16 7 18
Max 2 2 2 3 3 3 4 4 4 5 5 5
These results indicate that each zone has a chance to have a number of orders equal to the batch limitmeaning one
item for each order. This means that the batch limit should be considered in the system design, since it will be
necessary to have a number of trays equal to the batch limit.
Additional study is needed to investigate whether this relationship holds as the number of zones increases. The
maximum number of orders per zone per batch may also have some dependency with the order size. With larger
orders, it takes fewer orders to fill a batch, so with large enough orders (with respect to the batch limit), there may
not be enough orders in the batch to necessitate M buffer trays per zone.
In addition, the orders in the simulation were processed in a random order. Future work will examine sequencing of
orders to limit the number of orders assigned to each zone, so an order that would exceed the limit can be skipped in
the sequence and processed in a later batch.
4. Conclusions and Future Work
Design guidelines for a lean order picking system are presented in this paper. The overall facility is divided into two
areas: fast pick area and traditional area. In order to minimize the total cost of the facility, mathematical models are
presented for calculating the number of batches to allow warehouses to estimate the operating cost of the fast pick
area. Work is currently ongoing to evaluate the impact that the design of the fast pick area has on cost.
An additional issue for future work is to increase the actual batch size to be closer to the batch limit. In the testing
conducted in this paper, orders were selected in a random order and the batch was completed when the next order
would exceed the batch limit in any zone. Instead, the batch creation process could continue by examining all
remaining orders until all zones had reached the batch limit or all orders had been checked. Further improvement
Lin and Masel
may be possible by not using a random sequence for examining the orders. By selecting orders for a batch with
consideration of the workload across all zones, a better balance may be achieved.
In addition, a better balance in the fast pick area can be achieved by assigning the most popular SKUs to multiple
zones. This allows some items to be picked from multiple zones, so that when those items are needed for an order,
they can be assigned to the zone that has the lowest workload in that batch. The disadvantage of this approach is that
fewer SKUs can be stored in the fast pick area when a single SKU is assigned to multiple locations, so the tradeoff
in improving the balance and reducing the number of picks that can be made from the fast pick area must be studied.
Storing SKUs in multiple zones may also allow a reduction in the number of buffer trays that are needed in each
zone below the batch limit. If a zone has more orders assigned in a batch than it has buffer trays, one or more that
zones picks can be reassigned to another zone.
References
1. de Koster, R., Le-Duc, T. and Roodbergen, K.J., 2007, Design and control of warehouse order picking: a
literature review, European Journal of Operational Research, 182, 481-501.
2. Hsieh, L. and Tsai, L., 2006, The optimum design of a warehouse system on order picking efficiency,
International Journal of Advanced Manufacturing Technology, 28, 626-37.
3. Petersen, C. and Aase, G., 2004 A comparison of picking, storage, and routing policies in manual order
picking, International Journal of Production Economics, 92, 11-19.
4. Dekker, R., de Koster, M.B.M, Roodbergen, K.J., and van Kalleveen, H., 2004, Improving order-picking
response time at Ankor's warehouse, Interfaces, 34, 303-313.
5. Kong, C., 2007, Design and management of a lean order picking system, M.S. Thesis, Ohio University.
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