A robust multi-objective optimization model for inventory and production management with environmental and social consideration: A real case of dairy industry

Every day, an abundance of perishable materials and products are transferred from suppliers to producers, as well as from producers to retailers. In the meantime, operating costs, transportation costs, and environmental impacts enhance due to the limited lifespan of dairy products, time constraints, limited inventory to hold, and high frequency of transportation. This paper is about designing a three-level sustainable dairy supply chain under uncertain conditions. In this study, a multi-objective model is proposed to minimize the total costs and environmental impacts, and maximize the social impacts of a multi-period and multi-product chain composed of suppliers, producers, and retailers, which is applied to a dairy company. The delivery time and the first-in, first-out (FIFO) policy of the products are of particular importance in the proposed model. Moreover, a robust optimization approach is applied to consider the uncertainty associated with demand, transportation costs, production costs, holding costs, and facilities’ capacity. To solve the proposed model, a hybrid method based on a heuristic algorithm, and the augmented ε-constraint method is developed. Based on the results, economic costs and environmental impacts decreased by 18.5% and 25%, respectively. The conclusions indicate the efficiency and applicability of the proposed model and also show that the developed algorithm can attain high-quality solutions in a reasonable time.