Cost-effective pallet management strategies

•Compare three existing pallet management strategies: single-use, buy/sell, and leased pallets.•Develop cost relationship models with outputs obtained from four stochastic models.•Analyze the effect of salvage cost, dwell fee, issue fee, retention rate on strategy performance.

The existing industry strategies for managing pallets, (single-use expendable pallets, buy/sell programs, and leased pallet pooling programs), are analyzed and compared using push and pull inventory control policies. A two-stage integrated framework is developed that combines cost relationship models with data gathered in industry with multi-echelon inventory performance measures. For the base case, the single-use expendable pallet approach presents the least cost of all strategies, but the leased pallet pooling programs outperform the buy/sell programs in terms of total cost. The intervals where each strategy is most attractive are shown with respect to pallet cost, salvage cost, dwell fees, effective issue fees, retention rates, and transportation costs.