The rapid depletion of fossil fuels and the increased environmental impact of their combustion make it necessary to find cleaner and more sustainable energy resources. Over the last decades, biodiesel has been introduced as an alternative because of its advantages over fossil fuels. However, the high production cost of biodiesel is one of the main obstacles to achieving its commercial viability. One way to improve the efficiency and sustainability of this process is to use Dairy Waste Scum (DWS), which is a waste product from the dairy industry as a feedstock. Selection of the feedstock used is only a part of the strategy to increase the sustainability of this type of production. The most effective way to achieve this is by optimising the activities across the supply chains (SCs). In addition, the sustainability of the biodiesel production process using DWS may be influenced by design of optimal product portfolio of the considered dairy SC. This study proposes an approach for optimal design of a sustainable combined dairy and biodiesel/diesel SC using dairy waste scum as a feedstock, generated from dairy SC. It is based on defining mixed integer linear programming (MILP) model of the optimal design of the considered combined SC. The latter includes economic and environmental assessments. The first one is defined as an optimization criterion while the second one is defined as a constraint. The model takes into account key SC activities such as infrastructure compatibility; the production of the dairy products; milk, dairy products and DWS transportation between the regions, carbon taxes, related with all SC activities. The environmental and economic performance of the combined dairy and biodiesel/diesel SC is assessed by the annual operating costs for the combined SC design and greenhouse gas (GHG) emissions of pollutants associated with its operation. The developed approach was implemented on a real case study from Bulgaria. The analysis of the environmental results shown that the total GHG emissions generated by the operation of the SC for all time intervals are mainly due to the production of the products in dairies and utilization of unused DWS for production of biodiesel.