Supply-chain system costs of alternative grocery industry pallet systems

Abstract

This paper reports results from a study of the financial components and relative advantages of two alternative pallet load systems: rental and purchased pallets. Through personal on-site and telephone interviews of 13 large pallet-using grocery companies in various regions of the United States, cost variable categories were established and cost ranges were assigned to each category for each system. Simulation modeling of each pallet system was performed, using data randomly generated from the defined ranges of costs. Results of the simulations indicate a statistically significant finding that rental pallet systems are, on average, more costly to the customers through the supply chain than purchased pallet systems, by at least $1.00 per pallet trip.