Date on Master's Thesis/Doctoral Dissertation


Document Type

Doctoral Dissertation

Degree Name

Ph. D.


Industrial Engineering

Degree Program

Industrial Engineering, PhD

Committee Chair

Gue, Kevin

Committee Co-Chair (if applicable)

Gentili, Monica

Committee Member

Gentili, Monica

Committee Member

Bai, Lihui

Committee Member

Biro, Csaba

Author's Keywords



In a unit-load warehouse, products are stored and retrieved in pallet quantities. Examples include retail distribution centers (DC), third-party DCs, and transshipment hubs in freight transportation. Expenses related to space are a significant component of the operational cost of unit-load warehouses; therefore, maximizing space utilization is important. Moreover, the continuing revolution of retail e-commerce is changing the role and design of modern distribution centers (Boysen et al., 2018). An important trend with serious implications for design is the desire of many distributors to locate DCs in or near metropolitan areas in order to support same-day service or better (Thuermer, 2018). Land in these areas is very expensive, so there is a need to make the best use of existing space. The ability to store more products in the same space increases inventory availability and therefore service, and the ability to store the same inventory in a smaller footprint reduces costs. In this dissertation, we propose two strategies to improve space utilization in unit-load warehouses. We aim to minimize what we called loss of vertical space within slots (LVS)—the mismatch between the height of the pallet and the height of the slot where it is stored. LVS is a significant problem because it is standard practice to design storage racks in unit-load warehouses with all slots of equal height (maximum pallet height) such that every pallet can fit in every slot; however, pallet heights vary greatly. We propose the use of storage racks with multiple slot heights so that slot heights can better match the distribution of pallet heights. We analyzed historic (forecasted) inventory levels and the pallet heights to determine a robust design that guarantees a desired storage service level. Our method addresses the new warehouse design decisions that arise when having multiple slot heights: How to arrange the different slot heights in the rack-bays? How to organize the layout? How to avoid storage shortages? How do different slot heights affect travel times? We found that using multiple slot heights in unit-load warehouses has significant benefits in terms of footprint, expected travel time, and racking cost. For a typical warehouse, we expect space savings of 25–35 percent, depending on the number of slot types, and savings of 15–25 percent in annual operating cost. Although using multiple slot heights significantly decreases the loss of vertical space within slots, it does not completely eliminate it, and in warehouses where inventory levels are highly variable or product mixes change rapidly, this wasted space can still be significant. Examples of this situation in practice include warehouses with correlated order profiles, demands with seasonal peaks, new product launches, and distribution network consolidations. For such business environments, we propose pallet racks with dynamic heights as a way to maximize space utilization. Contrary to traditional pallet racks, the uprights and beams of pallet racks with dynamic heights are equipped with a mechanism to adjust slot heights easily. We found that pallet racks with dynamic heights have expected space savings of 16–30 percent when compared to traditional pallet racks.