Increasing the revenue of self-storage warehouses by facility design
Gong, Yeming and De Koster, Rene and Frenk, Hans and Gabor, Adriana (2013) Increasing the revenue of self-storage warehouses by facility design. Production and Operations Management, 22 (3). pp. 555-570. ISSN 1059-1478 (Print) 1937-5956 (Online)
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Official URL: http://dx.doi.org/10.1111/j.1937-5956.2012.01380.x
Self-storage is a booming industry. Both private customers and companies can rent temporary space from such facilities. The design of self-storage warehouses differs from other facility designs in its focus on revenue maximization. A major question is how to design self-storage facilities to fit market segments and accommodate volatile demand to maximize revenue. Customers that cannot be accommodated with a space size of their choice can be either rejected or upscaled to a larger space. Based on data of 54 warehouses in America, Europe, and Asia, we propose a new facility design approach with models for three different cases: an overflow customer rejection model and two models with customer upscale possibilities, one with reservation and another without reservation. We solve the models for several real warehouse cases, and our results show that the existing self-storage warehouses can be redesigned to generate larger revenues for all cases. Finally, we show that the upscaling policy without reservation generally outperforms the upscaling policy with reservation.
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