201

Suggested Readings
Battina, Daria, Alessandro Persona, and Fabio Sgarbossa. “Innova- Risks and Increasing Eco-Efficiency.” International Commerce
tive Real-Time System to Integrate Ergonomic Evaluations into Review 10, no. 1 (2011): 22–31.
Warehouse Design and Management.” Computers & Industrial Holmola, Olli-Pekka and Harri Lorentz. “Warehousing in Northern
Engineering 77 (2014): 1–10. Europe: Longitudinal Survey Findings.” Industrial Management &
Davarzani, Hoda and Andreas Norrman. “Toward a Relevant Data Systems 111, no. 3 (2011): 320–340.
Agenda for Warehousing Research: Literature Review and Prac- Mangano, Guilio and Alberto De Marco. “The Role of Maintenance
titioners’ Input.” Logistics Research 8, no. 1 (2015): 1–18. and Facility Management in Logistics: A Literature Review.”
Dhooma, José and Peter Baker.” An Exploratory Framework for Facilities 32, nos. 5 and 6 (2014): 241–255.
Energy Conservation in Existing Warehouses.” International Jour- Osyk, Barbara A., B. S. Vijayaraman, Manesh Srinivasan, and Asoke
nal of Logistics: Research & Applications 15, no. 1 (2012): 37–51. Dey. “RFID Adoption and Implementation in Warehousing.”
Faber, N., M.B.M. de Koster, and A. Smidts. “Organizing Ware- Management Research Review 35, no. 10 (2012): 904–926.
house Management.” International Journal of Operations & Produc- Van Belle, Jan, Paul Valckenaers, and Dirk Cattryse. “Cross Dock-
tion Management 33, no. 9 (2013): 1230–1256. ing: State of the Art.” Omega 40, no. 6 (2012): 827–846.
Franklin, Rod and Stefan Spinler. “Shared Warehouses: Sharing

CASE
CASE 10.1 FRESH PRODUCE CROSS-DOCKING FACILITY
Kevin Chong is the logistics manager of a fresh produce shelves or racks) that costs $600 and 100 minutes to
retailer in Singapore. As a fast-paced society, Singapore cross-dock a TEU
demands a very quick turnaround in many logistics opera- 3. A system aided by pick-to-voice technology (the order
tions. Kevin is undertaking a project to implement cross- pickers use a headphone and a microphone to com-
docking at the retailer’s current distribution center at municate with a computerized system to pick orders)
Tanjong Pagar, to substantially reduce the throughput time. that costs $800 and 90 minutes to crossdock a TEU
The distribution center replenishes all of the retail- 4. A semi-automated system that costs $1,000 and
er’s outlets across the island country, 24 hours a day, 7 days 80 minutes to cross-dock a TEU
a week. On an average, reefer containers arrive from over-
The times given above are average figures because
seas randomly at the rate of a twenty-foot equivalent unit
the actual times taken could vary. The costs are all inclu-
(TEU) every two hours, with a deviation of plus or minus
sive, including equipment depreciation, equipment run-
one. Due to the uncertainty at customs clearance, Kevin
ning, and supporting labor costs. There are simplifications
does not have control over the inbound containers’ exact
in the costs given above and the costs are assumed to be
arrival time. Whenever a container arrives, the cross-dock-
flat throughout the time.
ing operations will need to quickly unload the goods, break
Kevin needs to estimate how much time it will take
bulk, sort, pick, and then load the goods onto outbound
for goods to flow through the cross-docking operations in
trucks. Kevin is evaluating cross-docking equipment sys-
each equipment system. He can then calculate the perish-
tems. His primary concerns are the operating costs and the
ability loss on the basis of the throughput time.
perishability loss of fresh produce. To simplify the deci-
Kevin recalls from college that queueing theory might
sion making, it is estimated that a TEU container of goods
be applicable to such a problem. Essentially, the theory of
loses $500 per hour due to the perishable nature of fresh
queueing deals with the trade-offs in a waiting line. Given a
produce. The speed of cross-docking operations does not
processing capacity, there is often a waiting line in front of a
affect the average waiting time for outbound delivery.
server due to the randomness in order arrivals and processing
Kevin is evaluating the following four equipment
times. There is a cost, could be tangible or intangible, asso-
systems proposed by different vendors:
ciated with keeping customers/goods waiting. Investments
1. A manual system that costs $400 and 110 minutes in the processing capacity can speed up the process and re-
to cross-dock a TEU duce the waiting times. However, an organization needs to
2. A system aided by pick-to-light technology (the or- find out the optimal capacity level to minimize the total cost,
ders to be picked are identified by lights placed on which includes both the capacity cost and the cost of waiting.
202

Use a software package that enables you to perform 3. For each of the four equipment systems, what is the prob-
queueing analysis. Note that an M/M/1 queueing model ability that an inbound TEU can be unloaded immediately
assumes a single server, exponential arrival and service upon arrival?
times, first come first served queueing rule, unlimited 4. Which of the four equipment systems incurs the lowest total
cost to the retailer? It is assumed that the retailer bears all the
queue length, and infinite calling population. In the situ-
costs associated with perishability loss. The total cost involves
ation described above, the number of servers is always 1,
operating costs and perishability loss of fresh produce.
although different equipment systems vary in terms of 5. What is the capacity utilization rate of each of the four
operating costs and cross-docking speed. equipment systems?
6. Kevin is also considering a fully automated system proposed
QUESTIONS by another vendor. The vendor believes that its fully
automated system can set a record by taking only 70 minutes
1. For each of the four equipment systems, calculate the to cross-dock an inbound TEU. However, this system’s
expected number of inbound TEUs waiting in the queue operating costs will be much higher than those of the other
for cross-docking. equipment systems, averaging $2,000 per TEU. Based on the
2. For each of the four equipment systems, calculate the total cost to the retailer, would you recommend that Kevin
expected time of an inbound TEU in the queue, that is, the go for this fully automated system?
expected time a TEU must wait in line to be unloaded.