1. Introduction
The current pressure to increase the service level and reduce costs along with the increasing complexity of
supply chains create considerable logistics challenges to retailers (Fernie & Sparks, 2004). Nowadays,
retailers have a great power in controlling the distribution of goods in reaction to customer demand. Their
control can be as wide as from production up to end-user distribution (Fernie et al., 2010).
Warehouses are an essential component of any supply chain. Their major roles are: (1) buffering the
material flow along the supply chain; (2) consolidation of products from multiple suppliers; (3)
performing value added activities such as kitting, labelling, and product customization (Gu et al., 2007).
With the increasing focus on the supply chain performance optimization by managers, warehouses are
recognized as an area where significant performance improvements can be achieved (Won & Olafsson,
2005).