Buffer space hedging enabled production time variation coordination in prefabricated construction

Yue Zhai, Gangyan Xu, George Q. Huang

Research output: Journal article publicationJournal articleAcademic researchpeer-review

15 Citations (Scopus)


In this paper, an on-site production time variation coordination is studied between a general contractor and a building contractor. To entice the building contractor to reduce its production time variation, which improves system performance but adds more pressure to the building contractor, a buffer space hedging (BSH) method is offered by the general contractor. The BSH is to reserve more spare space at an intermediate warehouse and serves for contingency usage. It can be an incentive for the building contractor because he is always confronted with site congestion, which is the major causes of serious project time and cost overrun. Four decision scenarios are investigated and compared: (1) an on-site production time variation reduction (OPTVR) coordination model; (2) a BSH coordination model; (3) a Nash game model denoting an equal bargaining power setting; and (4) a building contractor led Stackelberg game model. Closed-form expressions of the optimal OPTVR amount, the BSH amount, and the profit-sharing rate are derived. Comparative analysis reveals that the proposed game mechanisms can mitigate the pressure caused by adopting the OPTVR. Numerical studies further demonstrate that a win-win outcome is reached in two game models. Especially, the Nash game outperforms the Stackelberg game, and the building contractor benefits more from the mechanism than the general contractor.

Original languageEnglish
Article number106082
JournalComputers and Industrial Engineering
Publication statusPublished - Nov 2019
Externally publishedYes


  • Game theory
  • Operational hedging
  • Prefabricated construction
  • Supply chain coordination

ASJC Scopus subject areas

  • Computer Science(all)
  • Engineering(all)


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