3.2. Class formation and allocation model (CFAM)
In CFAM, the objective is to minimize the sum of storage space cost and handling cost. The storage space
cost for class c is f 
P
lðal  ylcÞ. One way handling cost for class c is product of unit handling cost h, centroid
distance of the allocated space from the input/output point(s)
P
lðal  dl  ylcÞ=
P
lðal  ylcÞ and total number of
picks
P
pDp  xpc, i.e., h 
P
lðal  dl  ylcÞ=
P
lðal  ylcÞ
 
P
pDp  xpc.
We would like to ensure that a product assigned to class c (with c located nearer to the I/O point than the
c0) has a lower COI than products assigned to class c0 i.e., COIp  xpc 6 COIp0  xp0c0 8p 6¼ p0; c < c0. It is imperative
that a storage location l, can be assigned, at the most, to one class which leads to
P
cylc 6 1. A product
can be assigned to one and only one class i.e.
P
cxpc ¼ 1 8p. There should be adequate storage space to hold
the products in a class c in each planning period t, thus
P
pðIt
p  fp  xpcÞ 6
P
lðal  ylcÞ. Thus, CFAM can be
stated as follows: