Where to Stack the Chocolate? : Mapping and Optimisation of the Storage Locations with Associated Transportation Cost at Marabou

Abstract: Today, inventory management at Marabou is organised in such way that articles are stored based on which production line they belong to and are sent to storage locations close to their production line. However, some storage locations are not optimised, insofar articles are stored out of pure habit and follow what is considered most convenient. This means that the storage locations are not based on any fixed instructions or standard. In this report, we propose optimal storage locations with respect to transportation cost by modelling the problem mathematically as a minimal cost matching problem, which we solve using the so-called Hungarian algorithm. To be able to implement the Hungarian algorithm, we collected data regarding the stock levels of articles in the factory throughout 2016. We adjusted the collected data by turning the articles into units of pallets. We considered three different implementations of the Hungarian algorithm. The results from the different approaches are presented together with several suggestions regarding pallet optimisation. In addition to the theoretical background, our work is based on an empirical study through participant observations as well as qualitative interviews with factory employees. In addition to our modelling work, we thus offer several further suggestions for efficiency savings or improvements at the factory, as well as for further work building on this report.