Integrated zone picking and vehicle routing operations with restricted intermediate storage

The competitiveness of a retailer is highly dependent on an efficient distribution system. This is especially true for the supply of stores from distribution centers. Stores ask for high flexibility when it comes to their supply. This means that fast order processing is essential. Order processing affects different subsystems at the distribution center: orders are picked in multiple picking zones, transferred to intermediate storage, and delivered via dedicated tours. These processing steps are highly interdependent. The schedule for picking needs to be synchronized with the routing decisions to ensure availability of orders at the DC’s loading docks when their associated tours are scheduled. Concurrently, intermediate storage represents a bottleneck as capacity for order storage is limited. The simultaneous planning of picking and routing operations with restricted intermediate storage is therefore relevant for retail practice but has not so far been considered within an integrated planning approach. Our work addresses this task and discusses an integrated zone picking and vehicle routing problem with restricted intermediate storage. We present a comprehensive model formulation and introduce a general variable neighborhood search for simultaneous consideration of the given planning stages. We also present two alternative sequential approaches that are motivated by the prevailing planning situation in industry. Numerical experiments and a case study show the need for an integrated planning approach to obtain practicable results. Further, we identify the impact of the main problem characteristics on overall planning and provide valuable insights for the application of these findings in industry.