Automated Storage and Retrieval Systems and Capital Intensity Analysis

This report provides an overview of Automated Storage and Retrieval Systems (ASRS) and their relationship with capital intensity, focusing on their applications within manufacturing, distribution, and retail environments. It details the evolution of ASRS, from early implementations handling heavy pallet loads to modern systems managing smaller loads, and highlights the computerized control mechanisms that govern inventory management, retrieval scheduling, and item placement. The report explores the benefits of ASRS, including improved storage density, reduced labor costs, enhanced accuracy, and increased throughput capabilities, while also discussing various types of ASRS devices such as Vertical Lift Modules, Horizontal Carousels, Unit-load AS/RS, and Mini-load AS/RS. Furthermore, the report examines the concept of capital intensity, its implications for business operations, and its benefits within the supply chain, including increased productive capacity and technological improvements. It uses formulas to calculate capital intensity ratios and provides examples to illustrate these calculations. The conclusion emphasizes the advantages of ASRS, such as improved accuracy, proper storage, and quick retrieval, as well as its applications in various industries, including libraries.

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Introduction
Automated storage and retrieval system (ASRS or AR/RS)
They comprise numerous systems controlled using a computer to enable placing and
recovery of goods spontaneously from clear storing sites (Bektas, 2017, p. 40). The following
systems used in storing and retrieving goods are classically used in applications where;
Exactness is important as a result of damages to the load which are expensive.
Storage density is necessary because of space constraints.
There are loads with great volume moving in and out from the storing point.
No value is added in this process such that there is no processing but only storage and
transportation.
The mentioned system can also be used with standard or non-standards masses implying
that every average masses is capable of fitting in an evenly-sized volume and the handling
request of an item is simplified by standard loads (Dinaburg, 2013, p. 45). In manufacturing,
distribution, wholesale and retail makes the AS/RS intended for automatic keeping and
recovery of parts in the departments mentioned above (Frazelle, 2013, p. 76).

Background
The origination of AS/RS system started in 1960 where it focused on heavy pallets
loads but as a result of technology evolution, the loads handled became smaller. The
operation of the system takes place under computerized control regulating the
inventory of item stored. Specification of the type of item, quantity to be retrieved
from and scheduling the retrieval leads to accomplishment of retrieval. The
scheduling of retrieval, as well as the place where the item can be retrieved, is
determined by the help of a computer. It also gives proper direction to the automatic
storing and recovery machine to the location where the item is kept after which the
machine is directed to deposit the item at a location where it is picked up. Vehicles
guided automatically or a system of conveyors is sometimes part of the AS/RS
system that assists in moving the masses in the storage area in and out then
moving them again to loading docks or manufacturing floor (Dinaburg, 2013, p. 87).
When storing an item, the placing of a tray or pallet is done at the system input,
inventory data is injected into PC terminal besides the system participate in moving
the pallet to the storing area, choosing an appropriate site for the item and stores
the load (Bektas, 2017, p. 123).

Benefits of ASRS
 Modeling and running the logical representation of the physical storage facilities for
example ranking.
 Enabling a seamless link to order processing and logistics management in order to
pick, pack and ship product out of the facility.

 Reducing work necessities by up to two-thirds as shown in the diagram below (Sari,
2018, p. 76)
 Automation assists in a reduction in the cost of labor whereas depressing workers’
necessities and increasing safety as shown in below.

 Tracing the location where the products are stored, the supplier who supplied them,
and the period they are stored as shown o. Through analyzing such information, a
company is in a position of controlling the levels of inventory and maximizing the use
of warehouse space.
 The appropriate system assists the industries to reduce their expenditures by
lessening the amounts of needless portions and stored products and enhancing the
management of warehouse content. (Graves, 2009, p. 65).
 Enhance security of the product
 Increases the level of accuracy.
 Increases throughput capabilities.
 Provides accountability for individual and department.
 Extends cut off times of the order.

Loads are picked up and dropped off by the storage and retrieval machines and backing
up systems involves in transportation at a specific location where incoming, as well as
outgoing loads, are exactly located for suitable management (Dinaburg, 2013, p. 128).
Automated Storage & Retrieval System devices are of different types which include
Vertical Carousels, Horizontal Carousels, Unit-load, AS/RS, Mid-Load AS/RS, Mini-Load
AS/RS and Vertical Lift Modules. The systems mentioned are used as a stand-alone unit or
in incorporated workplaces called system or ponds (Manzini, 2012, p. 65).
Vertical lift module
The building of VLMs can take place fairly great to be matching the above space available
in the facility (Bektas, 2017, p. 87). The system mentioned above is monitored automatic
using vertical lift module and the inventory storage in the VLM is done on the front and
rear tray rails or locations (Sari, 2018, p. 87). The selling of VLMs system takes place in
many alignments which can be used in diverse logistics and industries. The ability to
provide innovative storage and retrieval solutions is done by the VLM system and since
the vertical lift modules are modularized makes it easy to be integrated into the existing
system. The VLMs save on the space of the floor, improved labor efficiency, picking
accuracy and enhanced worker ergonomics.

Horizontal Carousels
This is simply a sequence of bins revolving and each bin contains shelves that are
modifiable to 75’’ and can be constituted for a myriad of standard as well as distinct
application (Sari, 2018, p. 65). The system usually employs two to five horizontal
carousels in an incorporated workstation called a pod. The person in charge of the
operation simply inject cell location or part numbers, bin number and the shortest path
will be taken by the carousels while rotating. For fulfillment of orders, the system is
incorporated with a pick to light technology as well as software for inventory
management is used (Manzini, 2012, p. 77). The pod receives a wave of orders and
selection of orders is done to form a batch. Lights are simply followed by the operator
from the ‘merry-go-rounds’ and placed the item in a batch station after them. The pre-
position and rotation of the carousel will take place when picked (Bektas, 2017, p. 45).
After the completion of a batch, new batch induction and the procedure is redone till the
completion of the wave. Horizontal carousel system, in general, outdoes robotic system
for a fraction of the cost. There are two types of carousel which include;
 Horizontal and vertical carousel

Unit-load AS/RS
Large loads normally 1000+pounds can be stored by the machines, typically on the
pallet. These systems include lengthy and thin aisles of storage rack structure attaining
100 feet or taller. An automatic placement and loads retrieval is directed using a
software, this is done by a telescoping device which assists in depositing loads into, or
retrieving them out from where they were store specifically.
Mini-loads AS/RS
A mini-loads AS/RS perform the activities in a similar way like unit-load AS/RS. Lighter
goods are handled normally weighing less than 1000 pounds are handled by mini-loads
AS/RS. Instead of storing pallets, cartons or totes, store strays are stored by this
machine.


 Micro-loads AS/RS
This involves the loads not heavy as compared to mini-load AS/RS. Loads weighing fewer than 100 pounds is handled by this type of
system and there are loads in very small containers, trays, and totes.
How is Automated Storage and Retrieval Used?
Picking of order: Recovering and offering the needed inventory to pickers.
Kitting: Providing an area to group constituents parts for assembly.
Assembly: Keeping workpiece components for later production
Production: Storage of tools and components parts for manufacturing procedures.
Replenishment: Keeping extra inventory for restocking of supplementary picking systems
Storage: Providing dense long-term buffering for large or small items that are slow-to medium-movers.
Capital Intensive
The ratio of capital intensity is simply a logical tool that exhibits how the available assets in business are utilized since it indicates how
every asset of the business is generating revenue.
The capital-intensive investments tend to have a high level of operating leverage. The operating leverage is simply the ratio of fixed costs
to variable costs (Maybury, 2009, p. 55). There is a need for high production volume to provide an adequate return on investment. Capital-
intensive industries with high operating leverage make the businesses further exposed to stoppages in the economy compared to labor-
intensive businesses since fixed costs need to pay. Some of the capital-intensive investments include; steel production, oil production,
manufacturing of automobile, telecommunications and transport sectors.
The measuring of capital intensity is gauged by calculating how many assets are requiring in the production of a dollar sales, which is total
assets divided by sales. This is the inverse of the assets turnover ratio, indicating the competence with which the assets of the company
are being deployed in the generation of revenue. (Frazelle, 2013)
Capital-intensive investments use a large number of financial leverage since they are in a position of allocating plant and equipment as a
collateral. Unexpectedly fall of sales makes it risky to have high financial leverage as well as operating leverage (McHaney, 2012, p. 22).

Benefit of capital intensive in supply
 A supply chain is simply a system of organizations, people, information, activities and
resources involved in moving a product or service from supplier to customer. The
capital intensive benefits the supply chain through numerous activities which include;
 Increased productive capacity
 Increased aggregate demand
 Technological improvements
 Low price of goods for the consumers.
 Finance public sector debt.

 The country A will export the capital intensive while country B will export labour exclusive good . When the country
capital intensity is abundant, it will export the labor intensive good. The country is classified labor abundant
according to physical defination but labor abundant according to price defination.
 Capital Intensity formula
 In this formula, the calculation of ratio is done by using the overall possessions of the company and dividing by the
company sales (McHaney, 2012, p. 77).
 Capital intensity ratio=Total sales/assets

 The Total Asset Turnover Ratio can be used in the calculation of the calculation of ratio as shown below (Frazelle,
2013, p. 55).
 Capital intensity ratio= 1/ Total Assets Turnover Ratio

 A correct induction of the overall assets that are being used in the generation of revenue for the company is
indicated by the ratio.

 Example 1
 In a situation where company G has $400 billion in assets and sells $10 billion in product every year then;
 Capital intensity ratio= $400/ $10= 40
 Therefore, the capital intensity ratio is 40 or represents $200 billion/$5 billion.