Impact of shelf life on the trade-off between economic and environmental objectives: A dairy case
Martin Grunow and
International Journal of Production Economics, 2018, vol. 201, issue C, 136-148
Food manufacturers introduce more environmentally friendly processes to account for increasing sustainability concerns. However, these processes often go along with a reduction of product shelf life, limiting the delay of sales to future periods with higher prices. We develop a framework to analyze the impact of shelf life on the trade-off between economic and environmental performance of two types of dairy products. Since the differences in shelf life have their key impact at the tactical planning level, we develop an optimization model for this aggregation level. Its objectives reflect profit and relevant environmental indicators. A rolling horizon scheme is used to deal with price uncertainty, using Eurex futures as price predictors. Our framework uses these tactical planning results for strategic decisions on product and process selection. A real-life case study contrasts traditional milk powders against novel milk concentrates. Concentrates require less energy in processing, but have a shorter shelf life. Results show that powders offer a potential profit benefit of up to 34.5%. However, this economic value of shelf life is subject to a priori perfect price knowledge. If futures are used as price predictors, the value of shelf life is reduced to only 1.1%. The economic value of shelf life is therefore not a strong argument against the substitution of powders with more environmentally friendly concentrates. We also show that two objectives, profit and eutrophication potential, are sufficient to capture trade-offs in the case. Several product mixes are determined that omit powders and perform well with regard to profit and environment.
Keywords: Perishability; Sustainability; Multi-objective optimization; Objective reduction; Dairy industry (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:201:y:2018:i:c:p:136-148
Access Statistics for this article
International Journal of Production Economics is currently edited by R. W. GrubbstrÃ¶m
More articles in International Journal of Production Economics from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().