Abstract In order to realize the efficient utilization of pallet warehouse storage capacity of industrial enterprises and the efficient operation of the dispatch warehouses, and to reduce the cost of warehouse shifting, the cigarettes in the delivery warehouse are divided into three categories using ABC classification method and assigned with different internal stock-sales ratios. According to the stock-sales ratio, daily shipping demand and storage capacity, three different demands for dispatch are identified and subdivided, and several different strategies for dispatch are generated. An internal inventory control model based on the three-level storage system of pallet warehouse, transfer warehouse and delivery warehouse is established. The empirical results showed that: (1) the utilization ratio of pallet warehouse capacity increased from 75.2% to 82.3%, (2) Inventory turnover increased from 20.12 times per year to 22.24 times per year, (3) the unit cost of warehouse shifting decreased from 3.75 yuan per unit to 3.31 yuan per unit. The proposed model is proved to be effective in internal inventory control of industrial enterprises.