Heat loss from the kiln shell accounts for a certain proportion of total energy input in a rotary kiln. To reduce the heat loss, a novel heat recovery exchanger installed on the kiln shell is proposed to preheat water in this paper. Numerical simulations and experimental measurements are carried out to investigate the flow and heat transfer characteristics of the heat recovery exchanger. Then, multi-objective optimization models are proposed with the heat transfer area, the pressure drop and the modified entropy generation number set as objective functions. The mathematic models describe the relation between heat transfer rates and the design parameters of the heat recovery exchanger, i.e. the tube length, the tube numbers and the tube diameter. With the aid of the Matlab genetic algorithm toolbox, the optimized design parameters are obtained. Finally, economic analyses of a practical heat recovery system with nine heat recovery exchangers are proposed to estimate the saving of the fuel consumption. The optimization results show that the Pareto solutions are the trade-off between the two conflicting objective functions and give some final decisions considering specific requirements for the designers. Besides, the optimized results of heat transfer areas and pressure drop of the heat recovery exchanger are decreased by at least 18% and 11%, respectively. As the modified entropy generation number due to heat transfer and fluid friction decrease, the corresponding heat transfer area and pressure drop decrease, respectively. The economic analyses indicate that the heat recovery system is profitable and the revenue comes from the fuel savings. (C) 2016 Elsevier Ltd. All rights reserved.