Normative Models for Some Warehouse Sizing Problems

The problem examined is the determination of the optimum size for a warehouse used to store products over a finite planning horizon. Both fixed and changeable warehouse size problems are treated under conditions of deterministic and probabilistic storage demand. The latter is formulated as a linear programming problem and transformed via duality theory into an equivalent network flow problem for efficient solution. Costs considered are those due to warehouse construction, storage of products within the facility, and storage demand not satisfied by storage in the warehouse.