Joint decision on wooden pallet lease pricing and purchase volume under recycling and reusing mode in the Chinese market

Abstract

A closed-loop wooden pallet rental system was considered in this study, which involved a wooden pallet manufacturer, a wooden pallet leasing company, and several customers. To solve the joint optimization problem of pallet lease pricing and purchase volume under recycling and reusing mode, a mathematical model was constructed with the objective of maximizing the profit of pallet renters under deterministic and stochastic market demand. Meanwhile, comparative analyses were conducted on the optimal pricing, optimal order quantity, and expected profit under the two leasing modes of considering and not considering maintenance. On this basis, sensitivity analyses were performed on some parameters of the two modes. Results showed that pallet renters can adopt the maintenance strategy to increase profits by lowering the rental price appropriately regardless of the market demand. The wood pallet rental supply chain can be more efficient when the pallet residual value, recovery integrity rate, and utilization rate are higher and the out of stock cost and inventory holding cost are lower. Under the maintenance mode, a lower repairing price and higher reparability rate resulted in a more favorable maintenance mode.