Abstract

ABSTRACT

A simulation study of capacity utilization in a third-party logistics provider warehouse

Christiaan Casilimas Jacome

Nowadays companies focus more on their core business operations and subcontract third parties to perform services that were traditionally performed in-house. A third-party logistics provider (3PL) is an organization used to outsource elements of the supply chain like transportation and warehousing services. In 2019 this industry contributed about 90 billion CAD to the total Canadian GDP.
One of the biggest constraints in warehousing, is the effective management of warehouse capacity. Warehouses are physically limited by their layout, number of pallet positions, number of dock doors, size of the storage locations, size of the aisles, among others. Additional challenges may arise due to the seasonality of storage requirements. 3PL providers offering warehousing services are thus interested in determining at which levels of used capacity a warehouse is more profitable. This information can then be used to develop an order-accepting strategy for the company to be used during low and high seasons.
The main contribution of this thesis is to develop a simulation tool that provides a good starting point to answer these questions. In particular, the thesis focuses on a case study involving the operations of one particular 3PL warehouse with a major customer who moves only full pallets. This 3PL handles temperature sensitive products using a turret truck in a narrow aisle work environment.