The relative costs of returnable versus disposable milk containers to the retailer

The objective of this study was to determine the alternative costs to the retailer of handling milk in disposable versus returnable plastic containers. Also considered were the costs of three alternative retailer systems of handling returned plastic milk containers. The procedure involved application of synthetic cost analysis. Three size stores--small, medium, and large--were designed on the basis of total sales. Costs of handling milk in disposable and returnable plastic containers were estimated for each of the three size model stores. The costs associated with an honor system, a checkout system, and a service desk system of handling returnable plastic containers were also estimated. Costs of handling milk in disposable containers were $.01229, $.01185, and $.01152 per quart equivalent for the small, medium, and large size stores, respectively. The honor system of handling returned plastic milk containers had the lowest cost per quart equivalent. The checkout system had the next lowest cost per quart equivalent, and the service desk the highest. The costs of handling milk in returnable plastic containers for the three size stores, when each of the three retailer systems of handling empty returnable containers were employed, are given in the following table: Size of Store System Small Medium Large Honor .02177 .02387 .02719 Checkout .02287 .02555 .02824 Service Desk .02829 .02833 .03048 The added costs of handling milk in returnable plastic containers, as opposed to disposable containers, were $.00948, $.01202, and $.01567 per quart equivalent for the small, medium, and large size stores, when the honor system was employed. The added costs were $.01058, $.01370, and $.01672 for the three size stores when the checkout system was employed and $.01600, $.01648, and $.01896 when the service desk was used.