The development of ferrite-martensite dual-phase microstructures by cold-rolling and intercritical annealing of 0.06 wt pct carbon steel was systematically studied using a dilatometer for two different heating rates (1 and 10 K/s). A step quenching treatment has been designed to develop dual-phase structures having a similar martensite fraction for two different heating rates. An increase in heating rate seemed to refine the ferrite grain size, but it increased the size and spacing of the martensitic regions. As a result, the strength of the steel increased with heating rate; however, the formability was affected. It has been concluded that the distribution of C during the annealing treatment of cold-rolled steel determines the size, distribution, and morphology of martensite, which ultimately influences the mechanical properties. Experimental detection of carbon distribution in austenite is difficult during annealing of the cold-rolled steel as the phase transformation occurs at a high temperature and C is an interstitial solute, which diffuses fast at that temperature. Therefore, a cellular automata (CA)-based phase transformation model is proposed in the present study for the prediction of C distribution in austenite during annealing of steel as the function of C content and heating rate. The CA model predicts that the carbon distribution in austenite becomes more inhomogeneous when the heating rate increases. In the CA model, the extent of carbon inhomogeneity is measured using a kernel averaging method for different orders of neighbors, which accounts for the different physical space during calculation. The obtained results reveal that the 10th order (covering 10-µm physical spaces around the cell of interest) is showing the maximum inhomogeneity of carbon and the same effect has been investigated and confirmed using auger electron spectroscopy (AES) for 0.06 wt pct carbon steel. Furthermore, the optimization of carbon homogeneity with respect to heating rate has been performed using a bi-objective genetic programming (BioGP) strategy for the steel composition varying from 0.06 to 0.12 wt pct carbon along with other parameters like average austenite grain size and time of heating as the input variables. The analysis of the results obtained from BioGP suggests that the homogeneity of carbon increases with the increasing carbon concentration of steel. This is corroborated by analyzing the AES results obtained for 0.28 wt pct carbon steel using the same technique as that used for 0.06 wt pct carbon steel. © 2016, The Minerals, Metals & Materials Society and ASM International.