A framework for sizing an automated distribution center in a retail supply chain

Due to the recent emergence of a new generation of distribution center (DC) automation systems, there is a growing interest in DC automation in the retail industry. The investment decision related to this new class of DCs is financially and operationally significant. In this paper, we present a framework for sizing a full-case automated DC - a key step in the investment evaluation. We investigate the sizing issue at three levels: strategic, technology, and operations level. The approach informs systematic decision-making for sizing automated DCs. Moreover, we find little published research in context of sizing full-case technology DCs. We evaluate strategic, design, and operational issues for three key modules: regular case handling system (RCHS), non-regular case handling system (IRCHS), and less-than case handling system (LCHS). We employ discrete event simulation as a tool for an aggregate-level modeling and analysis. We develop an approach to sizing each module, develop characteristic curves for critical equipment for each module, and also size the key buffers. These tools and results could be used by retailers to make sizing estimates for equipment, trade-off between equipment, and for DC layout design.