PAMANTASAN NG LUNGSOD NG MUNTINLUPA

College of Business Administration

INTRODUCTION
In the swiftly transforming panorama of global commerce, efficient warehouse
management and streamlined inventory systems stand as the pillars of a thriving logistics
operation. The researchers recognize the multifaceted challenges of logistics companies
amidst the dynamic shifts in consumer demands. In response to this unyielding challenge, the
researchers have embarked on a meticulous exploration, delving into the intricate interplay
between warehouse layout design and advanced inventory management strategies within the
fabric of a logistics enterprise.
Within this research endeavor, titled "Optimizing Warehouse Layout and Inventory
Management System: An Assessment on a Logistics Company," the researchers are driven by
a profound understanding that optimizing warehouse layouts and refining inventory
management systems extend far beyond operational exigency; they constitute a strategic
imperative. This imperative significantly influences a company's ability to not only adapt but
to flourish in today's high-paced market, where adaptability and precision are paramount.
The researchers view this study as a transformative journey, an odyssey that aims to
transcend the conventional boundaries of warehouse practices. It is not merely an academic
endeavor but a profound exploration into the future of logistics. Within this scholarly
odyssey, the researchers are committed to unraveling how warehouse layouts, with their
spatial configurations and logistical nuances, harmonize with advanced inventory
management strategies. The aim is to decode the underlying principles that define operational
efficiency and customer satisfaction in the logistics landscape.
In the pursuit of innovative methodologies and cutting-edge technological
integrations, the researchers are poised to revolutionize conventional warehouse paradigms.
Their vision extends beyond optimization; it is a vision of a future where warehouses become
centers of innovation, agility, and unparalleled customer service. Through exhaustive
analysis, data-driven insights, and innovative thinking, the researchers are dedicated to
exploring uncharted territories. They intend not only to redefine warehouse practices within
the specific logistics company under study but also to contribute significantly to the broader
domain of logistics and supply chain management.
This research, spearheaded by the researchers, stands as a testament to their
commitment to advancing the field. Their ambition is not only to understand the dynamics of
warehouse layout and inventory management but also to innovate, offering transformative
solutions that resonate as industry best practices. As they meticulously navigate this complex
tapestry of logistics intricacies, the researchers are poised to pave the way for a future where

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efficiency, adaptability, and customer-centricity reign supreme in the realm of logistics and
supply chain operations.

PROBLEM STATEMENT
In today's rapidly expanding logistics landscape, companies face the formidable
challenge of optimizing their warehouse operations. Optimization holds the promise of
revolutionizing inventory management and warehouse layout, but the extent and implications
of this transformation remain unclear. Therefore, the problem this research seeks to address is
how warehouse layout and inventory management systems affect the productivity of a
logistics company. Specifically, it aims to answer the following questions:
1. What is the current efficiency level of the existing warehouse layout in the Logistics
Company under study?
2. What is the level of accuracy and reliability of the current inventory management
system in the Logicore Inc.?
3. What are the quantifiable benefits of optimizing warehouse layout and implementing
advanced inventory management systems on customer satisfaction and order
fulfillment speed?

RESEARCH OBJECTIVES
1. To know the current efficiency level of the existing Warehouse Layout in the
Logistics Company under study.
2. To identify the level of accuracy and reliability of the current Inventory Management
System in the Logicore Inc.
3. To determine the quantifiable benefits of optimizing warehouse layout and
implementing advanced inventory management systems on customer satisfaction and
order fulfillment speed?

Alternative Hypothesis (H1):

Optimizing warehouse layout and integrating advanced inventory management
systems significantly enhance operational efficiency, accuracy, and cost-effectiveness within
the logistics company under study.

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College of Business Administration

BACKGROUND OF THE STUDY

Warehouse Layout Optimization and Efficiency
Corporations nowadays employ efficient warehouse layouts as the center of their
operations and competence. An effective warehouse layout could swiftly meet client
requirements and enhance business performance. Businesses have frequently faced the
problem of figuring out how to structure and layout their warehouse to improve cost-
effectiveness while increasing efficiency. Warehouses are material handling facilities used for
the receipt, accumulation, order-picking, sorting, and shipment of commodities (J.P. van den
Berg, et al). Warehouse layout efficiency can be measured by the accuracy of inventory, order
accuracy, order cycle time, and order processing cost (Ballou, R.H.) Factors such as
warehouse location, warehouse design, and warehouse management can significantly impact
the effectiveness of inventory accuracy (Halawa, F., Dauod H., et al.) Warehouse layouts
require determining the capacity of the warehouse for stockpiling, data exchanges, and
material development, i.e. storage facility (Shashidharan, 2021).
The layout is a crucial choice that establishes an operation's effectiveness in the long
term. The layout is a facility design, analysis, conceptual, and manufacture of systems for a
good or service. The layout's primary objective is the arrangement layout improvement for
equipment and machinery for production so that the plan may maximize productivity
operations (Bisen, Vikram & Srivastava, 2009). According to Goetschalckx, McGinnis, and
Sharp (2008), no systematic functional design procedures for designing a warehouse have
been proposed or demonstrated. In the design phase of warehouses, more operational-related
performance measures, such as retrieval time per order, should be taken into account since
design decisions can strongly influence operational efficiency (Gu, Goetschalckx, and
McGinnis 2010).
According to Frazelle, E., making a storage warehouse facility involves optimization,
rationalization, computerization, and automation of material handling. Numerous design
components and resources need to be considered for warehouse operations to be efficient and
effective. Including physical layout, identifying the right place for every resource, how the
aisles are set up, how deep the lanes are, and how high the stacks are (Huertas, J.I., Díaz
Ramírez, J., et al.) and the storage and handling equipment, taking into consideration the
different kinds of racks and forklifts for putting things away and getting them out
(Rouwenhorst, B., Reuter, B., et al.) and the automation solutions, like conveyors and robots
(Baker, P., De Leeuw, S., et al.

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Models of warehouse optimization are devoted to the minimization of the total cost
for picking operations. Allocation of products is aimed at minimizing the picking distance.
Products with high demand should be allocated at slots closer to the output and input doors to
reduce the handling time. Picking time is proportionate to the withdrawal time in case
warehouses are characterized by rectangular shapes (Jarvis and McDowell, 1991). They
recommended the adoption of a storage policy based on allocating products in a stationary
position with the aim of minimizing the assumed picking time. Products with the highest
demand should be placed in the aisle to minimize the travel time.
Storage assignment policies are divided into three categories to fully optimize the
storage of warehouses: randomized, volume-based, and class-based (Petersen et al.)., 2004).
The randomized, or shared slot storage policy entails giving any vacant slot to a generic item
that needs it: this method guarantees minimization of needed slots, but its implementation
needs a system of good information that can document the shifting positions of products in
the warehouse (Petersen, 1999) Class-based and/or volume-based policies in the arrangement
of products are the simplest structures-storage schemes.
In volume-based storage systems, products are stored according to their demands or
their size near the Pick-up/Drop-off point (P/D). Locating high demand items near to the P/D
maximizes the picking efficiency (Shard and Gray et al., 1992). Van der Berg and Gademann
(2000) recommended the use of strategies connected to product classification based on the
demands of the consumers. They stated that efficient strategies for allocating products can
only be gained after a deep analysis of the incoming orders. In class-based storage, the
products are grouped and items of each class are placed within the same area of the
warehouse. Guenov and Raeside (1992) suggested the principle of ABC classification to
maximize the warehouse capacity, after they conducted an investigation into the effects of
zone shape in a class-based storage.

Inventory Management
Inventory management is the process of monitoring and controlling inventory levels
and ensuring adequate replenishment in order to meet customer demand, determining the
appropriate inventory level is crucial since inventory ties up money and affects performance
(Priniotakis & Argyropoulos, 2018). In their study, "Inventory Management Concepts and
Techniques," they discuss the interrelations between inventory management and how it can
affect the performance of a business. The result shows how important inventory management
is, and through knowing the right amount of inventory can increase business performance.

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Every business strives for optimal inventory (Dey and Seok, 2022). In their study
entitled, Inventory management pattern of steel industry, they stated that over-inventory and
under-inventory have a negative financial influence on the company's health and
effectiveness.
Also, in the study of the Role of Inventory Management on Competitive Advantage
among Manufacturing Firms in Kenya: A Case Study of Unga Group Limited, they stated
how important inventory control systems were for gaining a competitive edge; as a result,
businesses need to make sure that these systems are heavily involved in inventory
management tasks.
In the study of Mohopadkar & Patil, entitled Application of Inventory Management in the
Construction Industry, they stated that 60%-70% of the expenditures are for materials and an
organization's inventory management system is a key role in ensuring that projects are
completed on schedule, within budget, and within a given amount of time.
Thus in the study of Evaluation of the Role of Inventory Management in the Logistics
Chain of an Organisation, they stated that inventory management correlates with logistics
systems. Inventory management is necessary for logistics management to accomplish its
responsibilities, and an effective logistics system may improve the warehouse environment
and operating processes (Oluwaseyi, Onifade, Odeyinka, 2017).
This relates to the study of Tejesh and Neeraja (2018), about the study of Warehouse
Inventory Management Systems using IoT and Open Source Framework. In the study, it stated
that the newly developed warehouse inventory system is quite effective with the aid of a web
server that tracks any products using radio frequency identification (RFID).
This relates to the study of Sridharan and Yadav (2020), where they discuss the
artificial intelligence (AI) and machine learning (ML) techniques that provide insightful
information that may be used to optimize inventory levels and reduce costs. They present a
reinforcement learning-based technique that modifies reorder points and order quantities in
response to changes in real-time demand, resulting in increased inventory turnover and
decreased holding costs.

Logistics
Businesses try to satisfy clients by meeting market obstacles linked to time and
location, as well as by focusing on the quality and cost of the services rendered while taking
into account the needs and purchasing power of the customers. Customer satisfaction and
happiness guarantee continued purchases, which in turn ensure continued business operations.

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Customer satisfaction used to be more heavily weighted toward standards like

dependability and quality while lowering the expense of subpar products. (Ghoumrassi, A., &
Țigu, G., 2017). Satisfying their customers is the main focus of companies and businesses.
There are several factors of logistics that can help determine whether their goal is being met.
The factors are lead time, inventory, and transportation, can also affect customer satisfaction
(Umair, A. , Zhang, W. , Han, Z., and Haq, S. ,2019). Customer satisfaction is important since
it will give the company owners feedback on the product and service that they provide and
help them know how to improve.
In an economy, the systems (sectors) of change of goods—in the sense of physical,
tangible, real goods - can be distinguished. The provision of goods takes place through
production processes (extraction, processing, and treatment processes) in industrial
enterprises. The goods are qualitatively changed in this process. The goods are also
qualitatively changed during the use of goods. Through consumption processes (using and
consuming processes) in the broad sense, goods are consumed or worn out in households, but
also in industrial, commercial, or service companies. The link between the provision of goods
and the use of goods is formed by the distribution of goods. It takes place through
transformation processes (movement and storage processes), which do not change the goods
qualitatively but spatiotemporally. Systems for the spatiotemporal transformation of goods are
logistics systems; the processes that take place in them are therefore logistics processes. They
take place in so-called logistics companies. These are service companies whose purpose is to
bridge space and time. However, they also take place in industrial, commercial, or service
companies in which the bridging of space and time is merely a partial task for fulfilling the
Urban logistics is an organic system composed of logistics enterprises, logistics
nodes, and logistics infrastructure. Logistics enterprises, as economic organizations of
logistics activities, undertake basic functions such as transportation, storage, loading and
unloading, packaging, processing, and distribution. The logistics node is the spatial main
body that undertakes the city logistics function, including the logistics park, the logistics
center, and the distribution center. The integrated transportation network is the basis for the
operation of the entire social logistics system, such as railways, highways, airports, ports, and
other infrastructure. The logistics practitioners are the implementers of logistics activities.
The spatial density distribution of logistics employees can reflect the regional scope and
frequency of logistics activities. The industry generates a large amount of logistics demand
and is interdependent with the logistics industry in space. Therefore, from the perspective of
the industry, studying the spatial distribution of logistics demand, we can also analyze the

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changes in logistics space. Therefore, this paper holds that logistics space is a space system
composed of logistics enterprises, logistics nodes, logistics infrastructure, and industry.
Before the COVID-19 pandemic, the world had shown an increase in the transport of
goods in urban areas. During the social isolation and lockdown measures, urban mobility
transport and the distribution of products presented a substantial change, representing an
unsustainable development of the urban environment.

SYNTHESIS
In summary, the management of inventory plays a pivotal role in business operations,
influencing financial health and efficiency. Studies by Priniotakis & Argyropoulos (2018)
emphasize the significance of proper inventory management in enhancing business
performance. Dey and Seok (2022) stress the negative impact of overstocking and
understocking on a company's financial health, emphasizing the need for optimal inventory
levels. Oluwaseyi, Onifade, and Odeyinka (2017) highlight the correlation between inventory
management and logistics systems, underlining the importance of effective inventory
management in logistics.
Additionally, research by Tejesh and Neeraja (2018) introduces an efficient
Warehouse Inventory Management System utilizing IoT and RFID technology, enhancing
inventory tracking. Sridharan and Yadav (2020) explore the application of artificial
intelligence and machine learning techniques, demonstrating their potential to optimize
inventory levels and reduce costs through real-time demand adjustments.
Warehouse layout significantly impacts operational efficiency. Studies by J.P. van
den Berg et al. emphasize the importance of accurate inventory, order accuracy, order cycle
time, and order processing cost, all influenced by warehouse design and management (Ballou,
R.H.). Strategic considerations such as warehouse location and design can drastically affect
inventory accuracy (Halawa, F., Dauod H., et al.) and overall storage facility effectiveness
(Shashidharan, 2021).
Effective warehouse layouts demand careful planning, considering factors such as
aisle configuration, rack types, and automation solutions (Baker, P., De Leeuw, S., et al.).
Optimization models focus on minimizing picking distance, with strategies like randomized,
volume-based, and class-based storage policies (Petersen et al., 2004). Jarvis and McDowell
(1991) suggest stationary product positions, minimizing picking time, especially for high-
demand items.

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Artificial Intelligence (AI) plays a transformative role in warehouse operations. AI-
driven robots and automation optimize tasks, enhancing efficiency and reducing operational
costs (Wen et al., 2018). AI's ability to process vast amounts of data aids in accurate demand
forecasting and inventory optimization (Rupa Dash, Mark McMurtrey, Carl Rebman,
Upendra K. Kar, July 2019).
In logistics, the integration offers diverse benefits. AI-powered technologies, such as
autonomous vehicles and robotics, enhance last-mile deliveries and warehouse operations
(Jorg Junghanns, 2023). AI algorithms analyze market patterns and historical data, improving
inventory management, warehouse layout, route optimization, and demand forecasting (Anish
Rege, Succeeding in the AI supply-chain revolution). Additionally, real-time monitoring and
control by AI enables responsive and flexible supply chain management (The Impact of
Artificial Intelligence on the Supply Chain in the Era of Data Analytics).
In conclusion, the synergy between effective inventory management, strategic
warehouse layouts, and AI-driven technologies is imperative for businesses striving for
operational excellence and financial efficiency. These studies collectively emphasize the
critical role of proper inventory management, thoughtful warehouse design, and AI
integration in shaping the future landscape of supply chain operations.

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METHODOLOGY
SAMPLING DESIGN
RESPONDENTS AND PLACE OF THE STUDY
The respondents for this quantitative study will consist of employees and key
stakeholders involved in the logistics operations of the targeted company. Specifically, this
will include warehouse managers, inventory supervisors, logistics coordinators, and
employees directly engaged in inventory management and order fulfillment processes.
The study will be conducted at AAI Worldwide Logistics, a prominent logistics
company located in Barangay Sucat, Muntinlupa City. AAI operates a sizable warehouse
facility equipped with advanced inventory management systems. The study will focus on this
warehouse facility, analyzing its layout and inventory management processes within the
logistics operations. The chosen location provides an ideal setting for understanding the
practical implications of optimizing warehouse layout and implementing advanced inventory
management systems within a real-world logistics context.
The research team will work closely with the designated personnel at AAI Worldwide
Logistics to gather data, conduct surveys, and perform on-site observations, ensuring a
comprehensive and detailed analysis of the warehouse layout and inventory management
systems. All data collected will be treated with utmost confidentiality and used solely for
research purposes, respecting the privacy and policies of the chosen company.

SAMPLING TECHNIQUE
The researchers will use Purposive Sampling since the researchers seek out the
participants who have specific qualities that are capable of providing accurate information. In
this type of non-probability sampling, the researcher makes selections about which people to
include in the sample based on a range of factors, such as their knowledge and expertise in the
research topic and willingness to participate in the study (Oliver, 2006).

SAMPLING SIZE
The research sampling size targets the workers at AAI Worldwide Logistics. The
sample is based on a priori statistical power analysis and used G* Power Suit with a power =
0.95, effect size = .50 and alpha .05 to yield a sample size of 59. Since the participants are

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less than 100, the analysis will focus on all workers of the company. 42 respondents will be
needed for the survey.

RESEARCH DESIGN
NATURE OF RESEARCH DESIGN
The study entitled "Optimizing Warehouse Layout and Inventory Management
System: An Assessment on a Logistics Company" uses a quantitative descriptive research
design. Since the researchers wanted to know how the selected logistics companies'
warehouse layout affected their production and operation, and how AI affected their inventory
management system, they figured out how to conduct an interview with the managers and
supervisors of the chosen logistics companies. It is a qualitative descriptive research because
the data and information that will be gathered through the interview would be non-numerical
and based on the interviewees' personal experiences and knowledge.

RESEARCH INSTRUMENT
The research entitled "Optimizing Warehouse Layout and Inventory Management
System: An Assessment on a Logistics Company" employs questionnaires to gather
quantitative data from warehouse personnel, providing valuable insights into their
perceptions, experiences, and suggestions for improvement. By employing questionnaires as a
research instrument, our study aims to gain a comprehensive understanding of the
perceptions, experiences, and suggestions of warehouse personnel, ultimately leading to data-
driven recommendations for optimizing warehouse layout and inventory management
systems, enhancing employee satisfaction, and improving overall logistics operations.

PRIMARY AND SECONDARY SOURCES

Primary Sources
The primary sources for the quantitative study, "Optimizing Warehouse Layout and
Inventory Management System: An Assessment on a Logistics Company," will encompass
first-hand data collected directly from the targeted logistics company. These primary sources
will include structured surveys and interviews conducted with the company's employees,
including warehouse managers, inventory supervisors, and logistics coordinators. Through
these surveys and interviews, valuable quantitative data will be gathered, providing insights
into the current efficiency of the warehouse layout, the accuracy of the inventory management

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system, and the perceived benefits resulting from optimization efforts. Additionally, on-site
observations and direct measurements within the company's warehouse facility will offer real-
time quantitative data, ensuring the study's findings are grounded in the company's specific
operational context.

Secondary Sources
The secondary sources for this study will encompass scholarly articles, industry
reports, academic journals, and books related to warehouse management, inventory
optimization, and technological integration in logistics. These sources will provide a
theoretical framework, industry best practices, and benchmarking data against which the
findings from the primary research can be analyzed and interpreted. Industry publications,
conference proceedings, and case studies related to logistics and supply chain optimization
will be vital secondary sources, offering insights into successful strategies employed by other
companies. Additionally, reports from market research firms and authoritative organizations
within the logistics sector will provide valuable statistical data, trends, and comparative
analyses, enhancing the study's depth and contextual relevance. The combination of primary
and secondary sources will ensure a robust and comprehensive analysis of the optimization of
warehouse layout and inventory management systems in the logistics company under
examination.

DATA COLLECTION
DATA GATHERING PROCEDURE
In gathering data from our chosen respondents, the researchers first seek permission
from the chosen respondents if they are willing to be surveyed. After the respondents'
permission is granted and the research adviser, including the panelists, approves the given
questionnaire, the researchers will notify the respondents days before the actual survey so that
the respondents will be able to choose their time of availability.
On the day of the data gathering, the researchers will conduct an on-site survey for
the convenience of the respondents and will provide them with a data privacy statement that
states that their answers will be confidential and secured and will only be used for research
purposes. The questionnaires to be asked will be based on the background of the study and the
problem statement of the study.

SCALES

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The researchers will use a 5-point Likert Scale in determining if the optimization of
warehouse layout and integration of advanced inventory management systems will enhance
operational efficiency, accuracy, and cost-effectiveness within the logistics company under
study.

Likert-Scale Description Likert-Scale Likert-Scale Interval

Very Unlikely 1 1.00-1.80

Unlikely 2 1.81-2.60

Neutral/Uncertain 3 2.61-3.40

Likely 4 3.41-4.20

Very Likely 5 4.20-5.00

STATISTICAL TREATMENT

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