Abstract
The cost of warehouse operations has been increasing among consumer-goods companies due to rising scale and complexity. Given that order picking accounts for approximately 50% of total warehouse operational costs, this process has become a critical challenge for our sponsor company, Newell Brands. To address it, the company seeks to develop an inventory slotting methodology to minimize total travel distance during order picking. This capstone project develops an inventory slotting optimization model for the case pick region of the Baby Gear Business Unit at Newell Brands' Neosho Distribution Center (DC). The model applies an Order Oriented Slotting (OOS) strategy, which prioritizes assigning storage locations based on how frequently products are ordered together. To implement this, two approaches were explored: the first based solely on individual SKU picking frequency; and the second incorporating both SKU weight, SKU frequency and joint ordering frequency (i.e., how often SKUs are ordered together). The enhanced optimization approach considering SKU weight, SKU frequency and interaction frequency demonstrates the most significant operational improvement, achieving an estimated 24% reduction in travel distance. This methodology can be expanded to additional areas within the Neosho DC and other DCs operated by Newell Brands in the future.
