A simulation approach for modelling and investigation of inventory inaccuracy in warehouse operation

This thesis is focused on a simulation modelling approach to address the inventory inaccuracy problems in a warehouse operation. The main motivation which led to this research was a desire to investigate the inventory inaccuracy issues that have been highlighted by a logistics company. Previous and current research into inventory inaccuracy issues is largely related to the development of RFID technology as a possible solution to inventory problems. Since the inventory inaccuracy related to RFID technology is focused on the overall measurement of inventory management and retail business, there are differences between this existing research and the research presented in this thesis which is focused on issues of inventory inaccuracy in a warehouse operation. In this thesis, warehouse operation is studied as a detailed sequence of processes that are involved in the flow of items physically in parallel with related information being stored in the computer system. In these processes there are many places where errors can occur in counting or recording details of inventory, or in physically moving, storing or picking items incorrectly. These details of a warehouse operation are used to develop a conceptual model of inventory inaccuracy in warehouse operations. The study also found that typically a product needs to be considered differently at different stages of its progress through a warehouse (and therefore within different sections of the conceptual model). This is because initially batches of a product are likely to be delivered from a supplier, therefore if errors occur soon after the product is delivered to the warehouse, the error might involve the whole batch (for example the batch may be misplaced and put in an incorrect storage location), or the error might involve just part of the batch (for example poor transportation by forklift truck may damage the packaging carton and some of the items within the carton). When the product is stored ready for meeting customer orders, it needs to be considered as individual items (and errors can occur in counting of individual items or individual items may be misplaced or stolen). Finally, when a customer order is received, the product will be picked and grouped to meet the requirements of the order (for example, one order may require 10 of the product whilst another order may require 20 of the product). Errors might again occur to the whole group or to just part of the group. (Continued ...)