Storage assignment policies
There are numerous ways to assign products to storage locations within the forward and reserve storage areas.
We describe five frequently used types of storage assignment: random storage, closest open location storage,
dedicated storage, full turnover storage and class based storage. For random storage every incoming pallet (or
an amount of similar products) is assigned a location in the warehouse that is selected randomly from all
eligible empty locations with equal probability (see e.g. Petersen, 1997). The random assignment method
results in a high space utilisation (or low space requirement) at the expense of increased travel distance (Choe
and Sharp, 1991). The random storage policy will only work in a computer-controlled environment. If the
order pickers can choose the location for storage themselves we would probably get a system known as
closest open location storage. The first empty location that is encountered by the employee will be used to
store the products. This typically leads to a warehouse where racks are full around the depot and gradually
more empty towards the back (if there is excess capacity). Hausman et al. (1976) argue that closest open
location storage and random storage have a similar performance if products are moved by full pallets only.
Another possibility is to store each product at a fixed location, which is called dedicated storage. A
disadvantage of dedicated storage is that a location is reserved even for products that are out of stock.
Moreover, for every product sufficient space has to be reserved such that the maximum inventory level can be
stored. Thus the space utilisation is lowest among all storage policies. An advantage is that order pickers
become familiar with product locations. In retail warehouses often the product-to-location assignment
matches the layout of the stores (De Koster and Neuteboom, 2001). This can save work in the stores because
the products are logically grouped. Finally, dedicated storage can be helpful if products have different