Robust Optimization of Sustainable Dairy Supply Chain with Products Demands Uncertainty and Environmental Impact Consideration

Abstract

Milk and milk products are an important part of the daily menu of millions of people around the world. Increasing the efficiency and competitiveness of this type of production is related to the implementation of the strategy of sustainable management of supply chains, which cover all processes from raw materials, through production to end users. The presence of fluctuations in the product demands on the markets also influences the sustainable operation of considered supply chain activities. The present study proposes an application of already developed robust optimization approach for optimal design of a sustainable dairy supply chain operating under uncertain products demands on a new case study from Bulgaria which include three milk suppliers, two dairies and three markets. The considered supply chain is related with a production of different dairy products according to different recipes while satisfying environmental and economic criteria defined in terms of costs. The latter is associated with the generated wastewater from dairy production and CO₂ emissions due to the energy consumed and transportation. Several optimization problems have been formulated and solved under nominal data for the product demands and four uncertainties levels - 0.25, 0.5, 0.75 and 1.
The obtained optimal values of the economic and environmental costs show that the optimization approach implementation results in sustainable solutions that do not change significantly with an increase in the uncertainty level of consideration of the product demands.