Safeway Designs Mixed-Product Pallets to Support Just-in-Time Deliveries

Abstract

In 1998, Safeway milk plants began daily deliveries to most stores, doubling their delivery frequency. The new schedule increased the workloads for assembling orders at the milk plant by 20 percent because, under the new system, very few store orders called for full pallets of a single product, and store-specific mixed pallets were time consuming to assemble. To reduce the excess workload, we designed two types of standard mixed pallets that, in quantities of one to three, could satisfy part of the demands of many stores on most days, thereby reducing the need for store-specific mixed pallets. Our mathematical model optimizes the design of the standard mixed-product pallets. These mixed-product pallets can be assembled prior to the peak shipping periods and during other off-peak times to ease peak workloads and eliminate excessive overtime. Safeway implemented the solution without our assistance and continues to use it nearly five years after implementation with good results.

Optimal Inventory Control with Retail Pre‐Packs

“…In production and distribution systems, materials often flow in fixed batch sizes or pre-packs, see, for example, Litchfield and Narasimhan (2000), Smunt and Meredith (2000), and Blackburn and Scudder (2009). The use of pre-packs has the advantage of smoothing production (Chao et al 2005), increasing the productivity in warehouses, reducing the number of order lines for retail stores, and improving the operating efficiency of supply chains (van der Vlist 2007). On the other hand, goods that are produced and shipped in large quantities or pre-packs are often disaggregated into individual items (called loose hereafter) at a break-bulk point (i.e., a distribution center) before continuing on to the point of final consumption.…”