Optimization of Warehouse Management in the Specific Assembly and Distribution Company : a Case Study

This paper discusses the optimization of warehouse management in the assembly and distribution company. As part of complex logistics system, warehouse management plays a significant role in every company, connecting the areas of storage, material flow, production, record keeping and dispatch with the company ́s economic objectives. It also has a significant impact on business operations and can be of an important competitive advantage. It may be argued that well-managed logistics, including a continuous material flow, cost minimization as well as overall streamlining of individual processes associated with manufacturing of products, are powerful strategic tools for companies and lead to their strong market position. It is almost an imperative for them to use modern knowledge in this area and strive for improvement. After the introducing chapters, paper includes an optimization proposal using particular methods of multi-criteria evaluation of variants which consists of determining the criteria for variants evaluation, developing the basic multi-criteria matrix and selecting as well as applying the specific method for final evaluation (in our case, the comparison with WSA and TOPSIS methods has been carried out). Final part of the paper outlines the most appropriate option regarding the introduction of an automatic identification system to optimize the warehouse management system.


INTRODUCTION
The selected company´s manufacturing program focuses on assembly and distribution of aerosol valves and their accessories, i.e. various aerosol dispensers, applicators and aerosol can lids.A part of the program also includes production of mechanical dispensers for non-pressurized packaging.
The Fig. 1 below presents a graphical illustration of the company site and the material flow of individual assembly and distribution inputs.
Based on a particular survey and analysis undergone at the company site, it was found that the greatest benefit of optimization would be to implement an automatic identification system.The implementation (and its wide scope) is able to streamline the whole warehouse management process not only within the selected company, but also within other companies dealing with similar warehousing issues.In addition, it can solve other emerging situations, and it is therefore necessary to consider an adequate selection of the aforementioned systems for automatic identification, i.e. a choice (a variant) between barcode identification system and RFID technology.Both of the systems will be further compared through specific methods of multi-criteria evaluation of variants, where certain criteria will be set on the basis of expected benefits for the company in the presented case study [1][2][3].

OPTIMIZATION PROPOSAL USING METHODS OF MULTI-CRITERIA EVALUATION OF VARIANTS
At present, there are a large number of multi-criteria evaluation methods based on different principles dealing with a particular evaluation of variants according to several criteria.A variant evaluated as advantageous under one criterion may not always be seen as the best evaluated variant under another criterion.Also, these methods solve conflicts between mutually contradictory criteria.For the given optimization proposal, the Weighted Sum Approach (WSA) method and the Technique for Order of Preference by Similarity to Ideal Solution (TOPSIS) method were used, with the latter serving as a confirmation of results of the former [4][5][6].

DETERMINATION OF CRITERIA FOR EVALUATING VARIANTS AND DEVELOPMENT OF BASIC MULTI-CRITERIA MATRIX
Next, it was necessary to determine certain criteria and assign the corresponding weightings to them.The criteria were defined on the basis of the required benefits for the company.The following table shows an overview of the determined criteria and the assigned weightings (Metfessel allocation method) [4], [7], [8].damaged (e.g. by water, tearing off ), and a given device reader (scanner) is unable to identify the code, there is still the option of manually registering and writing the barcode number.However, if one of the RFID tags is damaged, the information contained cannot be managed in any way.This criterion will be evaluated in the scale from one to ten (1 -10), where 1 denotes a certain possibility of additional handling in case of damage and 10 represents an impossibility of additional handling in case of damage.-Information Content -the criterion states how large the information content of data about a product or goods may be contained in the given automatic identification element.This criterion will be evaluated in the scale from one to ten (1 -10), where number 1 represents a small data entry option and number 10 stands for a large data entry option.

WEIGHTED SUM APPROACH (WSA) METHOD
This method is based on constructing a linear utility function on the scale from 0 to 1, with the worst variant (according to the given criterion) benefiting zero, the best variant benefiting 1 and the other variants benefiting between both values.Additionally, the method requires major information, a criteria matrix, and a vector of criteria weightings.It allows an overall evaluation for each of the variants and may therefore be used to search for the most favorable variant as well as to organize the variants from best to worst.Moreover, the above method is a special case of the utility function method.If an a i variant (on the basis of a j criterion) reaches a certain y ij value, it gives its user a particular benefit that may be expressed using the linear utility function.The total variant benefit is expressed by a weighted sum of values of partial utility functions, where u j are the partial utility functions of individual criteria and v j are the criteria weightings.The calculation (1) below applies [6], [9][10][11]: (1)

Explanatory notes:
Administrative Building; Warehouse of final products; Technical facilities; Tool works; Production and assembly; Other facilities; Inbound warehouses; Granulate; Buffer stocks; Regranulate Inbound raw materials into the production process; Flows into warehouse of final products; Production network; Covers.
Using the TOPSIS method, it was found again that Variant 1 (Barcodes) is the most advantageous option for introducing an automatic identification system.The TOPSIS method also confirmed the result of the WSA method.Therefore, Variant 1 will be selected for the automatic identification [13][14][15].

EVALUATION
The above analysis of the current state of the given manufacturing company pointed to the possibility of introducing an automatic identification system as the most advantageous variant proposing to optimize warehouse management.The main focus was predominantly on choosing between two systems, i.e. barcodes and RFID technology [1], [2], [16][17][18].
These systems were further subjected to multi-criteria evaluation of variants, where both of the used methods, based on a table of the set criteria, favor Variant 1 -introducing the considered automatic identification system through barcodes.By evaluating the proposals for effective implementation of warehouse management, the variant of introducing an automatic identification system by means of barcodes was eventually chosen.
In regard to the proposed implementation within the aforementioned company, the main benefits will include greater system clarity, saving time, eliminating paper documentation, eliminating errors and streamlining the material flow.

CONCLUSION
Both systems are used to collect the automatic data and can be used in a wide range of applications.Their implementation is entirely individual and depends on a number of other factors, such as the implementation environment, implementation costs or expected benefits.
Barcodes are the most widely used means of automatic data identification, and as opposed to the RFID tags, they represent a cheaper alternative.On the contrary, RFID technology does not require direct visibility when reading or writing data (and when reading more RFID tags at one time), yet it is a more costly solution.
Barcodes and RFID technology were further compared by particular methods of multi-criteria evaluation of variants, where the Weighted Sum Approach method and the TOPSIS method were used.The former evaluated Variant 1, i.e. the introduction of automatic identification using barcodes, as the most suitable option.Subsequently, this result was confirmed by the TOPSIS method.

3. 1 .
Criteria explanation -Cost of Realization -it is the total cost of realization.This criterion will be given in thousands of CZK.-Cost of Labelling per 1 Piece -as regards barcodes, it is CZK 0.40 per piece/code label, and as regards RFID technology, namely Smart label, it is CZK 3 each.-Handling in Case of Damage -should the barcodes be

Table 1
Criteria and Assigned Weightings for Multi-Criteria Evaluation of Variants

Table 2
Basic Matrix for Multi-Criteria Decision-Making