The effects of ionization, ion loss and ion-neutral collisions on ion acoustic wave modulations in a dusty plasma are investigated. It is found that the dynamics of the modulated wave is governed by a nonlinear Schrödinger equation with a linear dissipative (damping or growth) term. This linear dissipative term arises due to the combined influence of ionization, ion loss and ion-neutral collisions. Analytical and numerical investigations predict the formation of envelope (bright) soliton with growing or decaying amplitude with time. The ionization instability causes the amplitude amplification, whereas, ion loss and ion-neutral collisions are responsible for the amplitude decay. Results are discussed in the context of dusty plasma experiments.