Re-solve the forward reserve example in Section 6.6. In this case, assume that the restocking cost is $2 rather than $20.

Example 6.2 Consider the case that the forward area holds 500 cubic feet. There are a total of 11 SKUs (S1 to S11) that are being considered to be placed in the forward area. Data for the SKUs are provided in Table 6.6. Assume that the cost per restock is the same for all SKUs and is $20. Similarly, assume the cost per pick in the reserve area is the same for all SKUs and is $0.20/pick.
The rankings are shown in Table 6.6 based on the labor efficiency ratio from Equation 6.3.

Equation 6.3:

Transcribed Image Text:

TABLE 6.6 Data for Forward Reserve (Example 6.2) SKU S1 S2 S3 S4 S5 S6 S7 S8 S9 S10 S11 Cost per Pick (c) in Forward 0.13 0.13 0.12 0.15 0.18 0.17 0.13 0.10 0.14 0.18 0.17 Annual Number of Picks (p.) (1) 800 500 1200 400 600 300 900 700 200 200 350 Volume per Item (square feet) (2) 2 3 1 4 2 542 10 700 5 8 Annual Flow Volume (f;) (3) = (1)*(2) 1600 1500 1200 1600 1200 1500 3600 1400 1000 1400 2800 Ratio (1)/sqrt(3) 20.00 12.91 34.64 10.00 17.32 7.75 15.00 18.71 6.32 5.35 6.61 Rank 2 6 1 7 4 8 5 3 10 11 9