Production lead-time hedging and coordination in prefabricated construction supply chain management

Yue Zhai, Ray Y. Zhong, Zhi Li, George Huang

Research output: Journal article publicationJournal articleAcademic researchpeer-review

85 Citations (Scopus)

Abstract

This paper studies a coordination scheme to solve a production lead-time hedging (PLTH) issue in the prefabricated construction supply chain management. To mitigate tardiness delivery owing to prefab production uncertainty, the project contractor (PC) prefers to inform the prefab factory (PF) an earlier due date which is termed as PLTH strategy. However, this strategy forces the PF to compress its production process. A balance must be optimised through the proposed PLTH coordination scheme. It includes a PLTH-related cost term, i.e. crashing money (charged by the PF to the PC) and a constant transfer term. Three models with different power structures are considered. Firstly, two Stackelberg games with alternative decision-making sequences and an equal power model are discussed to obtain the optimal PLTH amount and crashing money. Later on, a cost-sharing term is used to fairly allocate the system surplus. It is observed that this coordination scheme reduces the PLTH amount and ensures win–win coordination for both parties. Some interesting managerial implications are also obtained from comparison analysis and numerical studies.

Original languageEnglish
Pages (from-to)3984-4002
Number of pages19
JournalInternational Journal of Production Research
Volume55
Issue number14
DOIs
Publication statusPublished - 18 Jul 2017
Externally publishedYes

Keywords

  • game theory
  • prefabricated construction
  • production lead-time hedging
  • supply chain coordination
  • supply chain management

ASJC Scopus subject areas

  • Strategy and Management
  • Management Science and Operations Research
  • Industrial and Manufacturing Engineering

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