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5.1.3 Productivity associated with warehousing

In today's business setting, most firms dealing with integrated logistics are conscious of measuring warehouse performance because it directly impacts on their profits. In terms of productivity measures (ratios), there are three basic approaches. The first is productivity , which is defined as the ratio of real output to real input. An example of this is the number of cases handled per labour hour. The second productivity measure is called utilisation which is defined as the ratio of capacity used to available capacity. This could refer to the amount of space used by pallets, the number of employee hours logged to those available or even the amount of cubic space used relative to that available. The final measurement is performance which is the ratio of actual output to standard output. Examples could include cases or orders picked per hour compared with what was planned and equipment hours run compared to what was planned (Bloomberg, Murray and Hanna 1998).

Ackerman (1983) identified the following important areas for improving warehouse efficiency:

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