Simulation for Transport Pallet Cost Reduction in Pet Food Manufacturing: An Empirical Case Study

SUMMARY This study examined different managerial scenarios for the cost reduction of transport pallets rented by a pet food manufacturer that produces pet food sold in local and international markets. A computer simulation model was developed on the basis of the empirical case to analyse the flow of pallets from the factory, the subcontractors and the distribution centre and to determine the system performance measures in terms of the average waiting times and the number of pallets in queues. The analysis showed that problems occurred when slow‐moving products occupied the rental pallets for a long time and because too much inventory was kept at the distribution centre. Two managerial scenarios were then proposed to alleviate these problems, involving pallet movement decisions by internal management. The results suggested a choice of decision supports to determine which managerial scenario was suitable for the business. The proposed implications may be beneficial to similar industries where a supply system of rental pallet service is applied. Copyright © 2011 John Wiley & Sons, Ltd.