Storage is a major warehouse function. Three
fundamental decisions shape the storage function,
i.e., how much inventory should be kept in the
warehouse for an SKU; how frequently and at
what time should the inventory for an SKU be
replenished; and where should the SKU be stored
in the warehouse and distributed and moved
among the different storage areas. The first two
questions lead to the lot sizing and staggering
problems, respectively, which belong to the traditional
inventory control area and are not further
discussed here. The readers may refer to Gallego
et al. (1996) and Hariga and Jackson (1996) for a
detailed review. This section will focus on the storage
assignment question, which includes the decisions
of assigning SKUs to various storage
departments and scheduling of inventory moves
between the departments, of assigning SKUs to different
zones (zoning), and of the storage location
assignment within a department/zone. The two
major criteria in making these decisions are the
storage efficiency, which corresponds to the holding
capacity, and the access efficiency, which corresponds
to the resources consumed by the insertion
(store) and extraction (order picking) processes.