MT437 Unit 6 Warehouse Robots Seminar Reflection Example

A Two-Year Robot Payback That Became Three and a Half: An MT437 Unit 6 Seminar Reflection on Warehouse Automation

[Student Name]

Purdue University Global

MT437: Strategic Warehouse Management

Unit 6 Seminar Reflection

[Instructor Name]

[Date]

Lookout Parts Supply, the robot vendor's pitch and the classmates are composite; the payback figures are recomputed from the case's numbers, and the sources cited are real.

The Pitch I Brought

The vendor's slide was persuasive. Sixteen autonomous mobile robots at $38,000 each, plus $120,000 for integration with the warehouse system, cost $728,000. The robots would carry totes between pick zones and the packing station, so pickers stopped walking, and the vendor said seven of the night shift's fourteen pickers would no longer be needed. At about $50,240 a year per picker, fully loaded, that saving would pay back the robots in about 2.07 years. I presented it to my seminar group as an easy decision.

The Question That Changed It

The instructor asked one question: when are fourteen pickers actually needed? I knew the answer once she asked. Fourteen pickers work the night shift in winter, during battery season, when cold weather drives store orders for batteries, starters and wiper blades. On an average night across the year, the shift needs about eleven. The vendor had compared the robots with the peak staffing level, not the average.

If the robots replace half the walking work, they displace about half of the average crew, about 5.5 people, not seven. At $50,240 each, the saving is about $276,300 a year, not $351,700, and the payback stretches to about 2.6 years before counting anything else.

The Cost the Slide Left Out

A classmate, Esperanza, who works at an online fulfillment center that runs robots around the clock, asked whether the price included the software. It did not. Her company pays an annual fleet management subscription, and when I checked the vendor's terms afterward, the subscription for sixteen robots was about $62,000 a year. Subtracting it, the net saving falls to about $214,300 a year, and the payback becomes about 3.4 years, two-thirds longer than the slide promised.

The robots did not change; the payback changed because the pitch compared them with our busiest night and left out the bill that arrives every year.

Why Her Building Is Different

Esperanza also explained why robots pay back faster where she works. Her robots run about twenty hours a day, seven days a week, because online orders arrive at all hours. Ours would run about eight hours a night, five or six nights a week, and sit idle the rest of the time. The same robot earns its cost in a fraction of the calendar time when it works two and a half times as many hours. Azadeh et al. (2019) note that the economics of robotized warehouses depend heavily on utilization and order profile, and Fragapane et al. (2021) describe how planning and control of mobile robots must be matched to the operation's demand pattern for the gains to appear.

What the Vendor Got Right

I do not want to swing too far. The vendor was right that walking is the largest share of our pickers' time, which the Unit 7 study later confirmed at about 47 percent of direct hours. Robots that carry totes attack exactly that share. The error was not in the idea but in the arithmetic: the wrong staffing baseline and a missing annual cost. A pitch built on the right baseline would still have been worth hearing.

Where I Have Landed

I no longer think the robots are an easy decision, but I do not think they are a bad one. A 3.4-year payback on equipment that should last seven or eight years can still be worthwhile. What changed is the standard I would apply to any automation proposal: savings must be computed against average staffing, not peak; every recurring cost, including software, maintenance and batteries, must be included; and the payback must be tested against the hours the equipment would actually work in our building, not in the vendor's showcase. Frazelle (2016) makes the same point about automation in general, that the business case is only as good as its assumptions about volume and use.

The Question I Could Not Answer

What I still do not know is whether the robots' idle hours could be filled. During the day, our building handles rush orders and replenishment, and the robots might carry totes for those as well. If they could work twelve hours a day instead of eight, the saving would rise and the payback would shorten, perhaps toward two and a half years. But day work is spread thinly across the building, and I do not know whether it would keep the robots busy enough to displace any daytime labor. I would need a few weeks of daytime travel data to find out.

References

Azadeh, K., De Koster, R., & Roy, D. (2019). Robotized and automated warehouse systems: Review and recent developments. Transportation Science, 53(4), 917-945. https://doi.org/10.1287/trsc.2018.0873

Fragapane, G., De Koster, R., Sgarbossa, F., & Strandhagen, J. O. (2021). Planning and control of autonomous mobile robots for intralogistics: Literature review and research agenda. European Journal of Operational Research, 294(2), 405-426. https://doi.org/10.1016/j.ejor.2021.01.019

Frazelle, E. H. (2016). World-class warehousing and material handling (2nd ed.). McGraw-Hill Education.