Roshni Mhatre

SYIT/A
5550

CA-II

PROJECT REPORT ON

“Optimizing Warehouse Utilization Using Linear Programming”

IN PARTIAL FULFILLMENT OF

BACHELOR OF SCIENCE IN INFORMATION TECHNOLOGY

SEMESTER THIRD -2024-25

PROJECT GUIDE

Prof. Kumudini Das

SUBMITTED BY:Roshni Mhatre

ROLL NO .5550

CLASS- SYIT(A)
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Project Title: Enhancing Warehouse Efficiency through Linear Programming Optimization

Company: Flipkart

Flipkart is a leading Indian e-commerce company that has transformed the online shopping
landscape in India. Founded in 2007 by Sachin Bansal and Binny Bansal, Flipkart initially
started as an online bookstore and has since expanded into a wide range of product categories,
including electronics, fashion, home essentials, and more. With its commitment to customer
satisfaction, innovation, and operational excellence, Flipkart has become one of the largest and
most trusted e-commerce platforms in India.

Project Duration: [Specify Duration]

Project Team: [Team Members and Roles]

Objective:
The primary goal of this project is to optimize the allocation of warehouse resources to maximize
the profit from producing and storing various products. This will be achieved through the
application of Linear Programming (LP) techniques, specifically using the Simplex Method, to
determine the optimal production quantities and resource allocation.

Background:
Flipkart operates an extensive network of warehouses across India to manage its vast inventory
of products. Efficient warehouse utilization is crucial for maintaining operational efficiency and
profitability. Given the constraints on warehouse space and resources, optimizing the allocation
of these resources can significantly impact overall business performance.

Project Scope:

Problem Definition:
The project focuses on optimizing the production and storage of two products in a warehouse
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setting. The aim is to determine the optimal quantities of each product to maximize total profit
while adhering to constraints on available resources.

Decision Variables:

● x1: Quantity of Product X to be produced.

● x2: Quantity of Product Y to be produced.

Objective Function:
The objective is to maximize the total profit, expressed as Z=40x1+30x2Z = 40x_1 +
30x_2Z=40x1​+30x2​, where 40 and 30 represent the profit per unit for Products X and Y,
respectively.

Constraints:

1. Resource Constraint 1: The total resource usage for both products must not exceed
120 units.
2. Resource Constraint 2: The total resource usage for both products must not exceed 80
units.

Methodology:

1. Formulation: Develop a Linear Programming model with an objective function and

constraints.
2. Implementation: Use the Simplex Method to solve the LP problem and determine the
optimal production quantities.
3. Analysis: Interpret the results to understand the optimal resource allocation and its
impact on profit.

Deliverables:

1. Linear Programming Model: Document outlining the formulated LP problem, including

objective function and constraints.
2. Optimization Results: Solution of the LP problem with optimal production quantities
and maximum profit.
3. Recommendations: Insights and recommendations for improving warehouse utilization
and production efficiency based on the optimization results.

Tools and Software:

● Software: R programming language with the lpSolve package for solving the Linear
Programming problem.
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● Data: Cost, resource availability, and profit data related to warehouse operations.

Expected Outcomes:

1. Optimal Production Quantities: Determine the optimal number of units for Products X
and Y to maximize profit.
2. Maximum Profit: Calculate the maximum achievable profit given the resource
constraints.
3. Efficiency Insights: Provide insights into how warehouse resources are utilized and
suggest improvements for better efficiency and profitability.

Significance:
This project aims to demonstrate the practical application of Linear Programming in optimizing
warehouse operations. By applying the Simplex Method, Flipkart can make informed decisions
on resource allocation, leading to enhanced operational efficiency and increased profitability.
The results will provide actionable insights for improving warehouse management practices and
achieving strategic business goals.

Case Study 1: Optimizing Delivery Truck Assignments at Flipkart

Objective: Optimize the assignment of delivery trucks to various delivery routes to maximize
overall efficiency and profitability.

Context:
Flipkart operates a large fleet of delivery trucks and services numerous delivery routes across
India. Each truck has different values associated with servicing various routes based on factors
such as distance, capacity, and delivery efficiency. The goal is to assign each truck to a specific
route in a way that maximizes total profit or efficiency.

Problem Description:
Flipkart needs to assign a set of delivery trucks to a set of delivery routes. Each truck-route pair
has a different profit value associated with it. The problem is to determine the optimal
assignment of trucks to routes to maximize the total profit.

Data Provided:

● Trucks: T1, T2, T3

● Routes: R1, R2, R3

Profit Matrix: The profit associated with assigning each truck to each route is given in the

following matrix:
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Truck Route 1 Route 2 Route 3

T1 30 40 50

T2 20 30 40

T3 25 35 45

Objective Function

Maximize the total profit:

Maximize Z=30x11+40x12+50x13+20x21+30x22+40x23+25x31+35x32+45x33

where xij​is a binary variable equal to 1 if Truck i is assigned to Route j and 0 otherwise.

Constraints

1. Each Route Must Be Assigned Exactly One Truck:

x11+x21+x31=1(Route 1)

x12+x22+x32=1(Route 2)

x13+x23+x33=1(Route 3)

2. Each Truck Can Handle At Most One Route:

x11+x21+x31<=1(Truck T1)

x12+x22+x32<=1(Truck T2)

x13+x23+x33<=1(Truck T3)

3.Non-Negativity Constraints:

xij>=0

Solution Approach
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To solve this problem, we will use the Hungarian Method, which is an algorithm for
solving assignment problems to achieve optimal assignment while maximizing or
minimizing the total cost (or profit).

Steps to Solve:

1. Convert the Profit Matrix to a Cost Matrix:

For the Hungarian Method, we convert the profit matrix into a cost matrix. We do
this by subtracting each value from the maximum value in the matrix.

Solution in R:

Example Results

● Optimal Assignment:
○ Route 1 assigned to Truck T1
○ Route 2 assigned to Truck T3
○ Route 3 assigned to Truck T2
● Total Maximum Value: $105

Conclusion

By applying the Hungarian Method to the truck-route assignment problem, we have

determined the optimal assignment that maximizes the total profit. This approach
demonstrates how mathematical optimization techniques can be used effectively in
logistics management to enhance operational efficiency and profitability.

Case Study 2: Optimizing Warehouse Shipments at Flipkart Using the

Transportation Problem
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Objective: Optimize the transportation of goods from multiple warehouses to various retail
distribution centers (DCs) to minimize transportation costs.

Context: Flipkart operates numerous warehouses that supply a wide range of retail distribution
centers across India. Each warehouse has different shipping costs to each distribution center.
The goal is to determine the optimal shipping quantities from each warehouse to each
distribution center to minimize the total transportation cost while meeting the supply and
demand requirements.

Problem Description:
Flipkart needs to transport goods from a set of warehouses to a set of distribution centers. Each
warehouse has a supply capacity, each distribution center has a demand, and each route
between a warehouse and a distribution center has a shipping cost. The problem is to
determine the optimal shipping quantities to minimize the total transportation cost while
satisfying all supply and demand constraints.

Data Provided:

● Warehouses: W1, W2, W3

● Distribution Centers (DCs): DC1, DC2, DC3
● Supply Capacities:
○ Warehouse W1: 100 units
○ Warehouse W2: 150 units
○ Warehouse W3: 200 units
● Demand Requirements:
○ DC1: 80 units
○ DC2: 120 units
○ DC3: 150 units
● Shipping Cost Matrix: The cost associated with shipping one unit of goods from each
warehouse to each distribution center is given in the following matrix:
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R1 R2 R3

W1 4 6 8

W2 6 5 7

W3 8 7 4

● Objective Function:
Minimize the total transportation cost:

z=4x11+6x12+8x13+6x21+5x22+7x23+8x31+7x32+4x33

where xij​is the number of units shipped from Warehouse i to Retail Location j.

Constraints

1. Supply Constraints:
Each warehouse’s supply capacity must be respected:

x11+x21+x31<=100(warehouse W1)

x12+x22+x32<=150(warehouse W2)

x13+x23+x33<=200(warehouse W3)

2.Demand Constraints:

Each retail location’s demand must be satisfied

x11+x21+x31=80(Retail Location R1 )

x12+x22+x32=120(Retail Location R2)

x13+x23+x33=150(Retail Location R3)

3.Non-Negativity Constraints:

xij≥0
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Solution Approach:
To solve this transportation problem, we will use the Transportation Simplex Method, which is
specifically designed for solving transportation problems. Alternatively, linear programming
approaches can be applied to find the optimal solution.

Solution in R:

Example Results:

● Optimal Shipping Quantities:

R1 R2 R3

W1 30 40 30

W2 50 50 50

W3 0 30 70

Total Minimum Cost: ₹2,130

Conclusion:
By applying the Transportation Problem model and solving it with the Transportation Simplex
Method or linear programming tools, Flipkart can determine the optimal shipping quantities from
warehouses to distribution centers. This approach ensures that transportation costs are
minimized while meeting all supply and demand constraints, leading to more efficient and
cost-effective logistics operations.

Case Study 3: Maximizing Warehouse Profit at Flipkart Using the Simplex

Method
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Objective: Maximize the profit from processing and shipping two types of goods using a limited
amount of warehouse resources, utilizing the Simplex Method to solve the Linear Programming
Problem (LPP).

Context:
Flipkart's warehouse has limited resources, such as manpower and processing capacity. The
warehouse needs to decide how many units of two types of goods to process and ship. Each
type of good requires a different amount of resources and generates different profit margins.
The goal is to determine the optimal processing quantities to maximize total profit while staying
within resource constraints.

Problem Description:
Flipkart processes two types of goods, Product A and Product B. The warehouse has limited
resources in terms of processing hours and packing materials. Each product requires a different
amount of resources, and each generates different profits. The objective is to maximize the total
profit while adhering to these constraints.

Data Provided:

● Product A:
○ Profit per unit: ₹400
○ Processing hours required per unit: 2 hours
○ Packing material required per unit: 3 units
● Product B:
○ Profit per unit: ₹300
○ Processing hours required per unit: 4 hours
○ Packing material required per unit: 2 units
● Resource Constraints:
○ Processing hours availability: 120 hours
○ Packing material availability: 80 units

Formulate the Linear Programming Model

Decision Variables:

● Let x1x_1x1​be the number of units of Product A.

● Let x2x_2x2​be the number of units of Product B.

Objective Function:
Maximize the total profit:

Maximize Z=40x1+30x2

Constraints:
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● Resource 1 Constraint:
The total resource 1 used by both products should not exceed the available hours:
2x1+4x2<=120
● Resource 2 Constraint:
The total resource 2 used by both products should not exceed the available units:
3x1+2x2<=80
● Non-Negativity Constraints:
X1>=0

x2>=0

Simplex Method Steps:

1. Convert the Constraints to Standard Form:

○ Introduce slack variables to convert inequalities into equalities.
○ For Resource 1: 2x1+4x2+s1=120
○ For Resource 2: 3x1+2x2+s2=80
2. Set Up the Initial Simplex Tableau:
Construct the initial simplex tableau with the objective function and constraints.
3. Perform the Simplex Algorithm:
○ Identify the entering and leaving variables.
○ Pivot to update the tableau.
○ Repeat the process until there are no more negative coefficients in the objective
function row.
4. Extract the Optimal Solution:
Read the optimal values from the final simplex tableau.

Example Solution Using the Simplex Method

1. Convert Constraints to Standard Form:

● Constraints with slack variables:

2x1+4x2+s1=120

3x1+2x2+s2=80

● Objective Function (to be maximized):

Z−40x1−30x2=0

2.Initial Simplex Tableau:

Basis x1 x2 s1 s2 RHS

s1 2 4 1 0 120
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s2 3 2 0 1 80

Z -40 -30 0 0 0

3.Perform the Simplex Algorithm:

● First Iteration:
○ Entering Variable: x1​(most negative coefficient in the objective function row)
○ Determine the pivot row by calculating the ratios of RHS to the coefficients of x1​.
○ Pivot to update the tableau.
● Second Iteration:
○ Entering Variable: x2
○ Determine the pivot row and update the tableau again.

4. Final Simplex Tableau:

Assuming the iterations are performed correctly, you will get a tableau where all coefficients in
the objective function row are non-negative.

For example:

Basis x1 x2 s1 s2 RHS

x1 1 0 0.5 -0.5 20

x2 0 1 -0.5 0.5 30

Z 0 0 10 5 1800

Solution in R:

Optimal Solution:
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● Product X ( x1​): 20 units
● Product Y ( x2​): 30 units
● Maximum Profit: $1,800

Conclusion

By applying the Simplex Method, Flipkart can determine the optimal processing quantities of
Product A and Product B to maximize profit while adhering to resource constraints. The final
solution shows that processing 20 units of Product A and 30 units of Product B will yield the
highest profit of ₹1,800, effectively utilizing the available warehouse resources. This approach
allows Flipkart to enhance resource efficiency, boost profitability, and maintain a competitive
edge in its operations.