Economic Sizing of Warehouses: Some Extensions

In the past, researchers presented a linear programming formulation for the economic sizing of warehouses when demand is highly seasonal and public warehouse space is available on a monthly basis. The static model was extended for the dynamic sizing problem in which the warehouse size is allowed to change over time. By applying simplex routine, the optimal size of the warehouse to be constructed could be determined . In this paper, an alternative and simple method of arriving at an optimal solution for the static problem is given. Four extensions of the static model are given. These extensions involve initial warehouse capacity,costs varying over time, economies of scale in capital expenditure and/or operating cost and stochastic version. The dynamic warehouse sizing problem is shown to be a network flow problem which could be solved by using network flow algorithms. The structure of an optimal solution is also given. The concave cost version of the dynamic warehouse sizing problem is also discussed.