A Sustainable Multi-objective Optimization Model for Design of Supply Chain Under Uncertain Products Demands and Products Prices: a Real Case of Dairy Industry

Abstract

Dairy production has a significant environmental impact related with wastewater and air pollution. In addition, it is a large consumer of water and energy. The most effective way to improve its sustainability is through analysis of the food-water-energy nexus, which can be done by optimizing all activities in the supply chain (SC) from the raw materials to the end user while meeting environmental, economic and social criteria. However, the presence of uncertainties regarding the main parameters of the SC would lead to problems related to the implementation of processes and the operating the system as a whole. To solve these problems an implementation of models for optimal design of dairy SCs that handle these uncertainties is needed. The present study proposes an extended version of already developed mixed integer non-linear programming (MINLP) approach to optimal design of a sustainable SC for the production of different dairy products according different recipes under uncertain products demands and products prices. The model has taken into account economic, environmental and social aspects. The obtained results show that the increase in the uncertainty level leads to an increase of values of economic, environmental and social costs as well as the profit, with the standard deviation of the same being the highest at the lowest level of uncertainty, while at the others it is preserved relatively constant. The number of workers employed by the supply centers, dairies and markets is kept constant regardless of the variation in the level of uncertainty of products demands and products prices.