Work

Sustainable Inventory Management for Perishable Dairy Products: A Circular-Economy Approach Integrating Environmental Costs

Year: 2026

Type: article

Abstract: The transition toward sustainable food systems requires innovative approaches to managing perishable products, where inefficient inventory practices contribute significantly to global food loss and environmental degradation. This study develops a circular-economy-oriented inventory optimisation framework for dairy supply chains that integrates environmental externalities and waste valorisation pathways into operational decision-making. Departing from traditional linear “produce–consume–dispose” models, this study embeds three core sustainability mechanisms into a stochastic dynamic-programming framework: (1) progressive environmental cost internalisation aligned with EU Emissions-Trading System carbon pricing, capturing both waste-related emissions and cold-chain energy footprints; (2) circular-economy value-recovery channels that redirect near-expiry products to secondary applications (animal feed, biogas production, industrial processing) rather than disposal; and (3) deterioration-aware demand management that minimises resource throughput while maintaining service levels. Empirical calibration using Ukrainian dairy industry data demonstrates that sustainability-integrated inventory policies reduce waste generation by 4.8–10% relative to conventional approaches, with high-deterioration products showing the greatest potential for improvement. The authors identify a critical threshold in the circular economy: when salvage recovery rates exceed 35%, waste becomes an economic and ecological asset, fundamentally altering the sustainability calculus of inventory decisions. Environmental costs account for 4.6% of total operating expenses at current carbon prices, a share projected to increase substantially as climate regulations tighten. The findings provide actionable guidance for dairy supply chain stakeholders pursuing the Sustainable Development Goals (SDGs 2, 12, 13): processors should establish circular-economy partnerships that achieve salvage rates above 35%, implement product-specific policies for high-deterioration items, and proactively integrate carbon pricing into inventory optimisation. The framework bridges sustainable operations theory and circular economy practice, offering a replicable model for transitioning perishable food supply chains toward closed-loop, low-waste configurations that simultaneously reduce environmental impact and enhance economic performance.

Source: Sustainability

DOI: 10.3390/su18083975