A knowledge-based logistics operations planning system for mitigating risk in warehouse order fulfillment

Customer orders with high product varieties in small quantities are often received by the logistics service providers with requests for customized value-added services and timely delivery, so the warehouse has to plan its logistics strategy in such a way that it can effectively maintain the quality of its services. In addition, they have to pay attention to the possible risks that may occur during the logistics operations so as to prevent loss if they fail to deal with the problems and risks properly. In order to facilitate the decision making process in warehouse operations, an intelligent system, namely the knowledge-based logistics operations planning system (K-LOPS), is proposed to formulate a useful action plan by considering the potential risks faced by the logistics service providers. The system makes use of Radio Frequency Identification technology to collect real-time logistics data. Analytical hierarchy processes and case-based reasoning are integrated into the system. These help to categorize the potential risk factors considered by customers and formulate the logistics operations strategy, respectively, as the different product characteristics and order demands are taken into consideration. The searching performance in case-based reasoning is enhanced by the iterative dynamic partitional clustering algorithm. After conducting a trial run in the case company, the result shows that there is significant improvement in case retrieval time and in solution formulation. •To present a new framework to facilitate the decision making process in warehouse.•To interactively monitor and optimize the logistics flow using hybrid techniques.•To propose a procedure which is considered suitable for warehouse risk assessment.•To consider product characteristics and order demand in logistics strategy formulation.•To demonstrate the usefulness of system by conducting a trial run in a 3PL company.