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

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

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.

Suggested Citation

  • Yue Zhai & Ray Y. Zhong & Zhi Li & George Huang, 2017. "Production lead-time hedging and coordination in prefabricated construction supply chain management," International Journal of Production Research, Taylor & Francis Journals, vol. 55(14), pages 3984-4002, July.
    • Handle: RePEc:taf:tprsxx:v:55:y:2017:i:14:p:3984-4002
    DOI: 10.1080/00207543.2016.1231432
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    Cited by:

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    2. Yang Liu & Jianjun Dong & Ling Shen, 2020. "A Conceptual Development Framework for Prefabricated Construction Supply Chain Management: An Integrated Overview," Sustainability, MDPI, vol. 12(5), pages 1-29, March.
    3. Wen Jiang & Meng Yuan, 2022. "Coordination of Prefabricated Construction Supply Chain under Cap-and-Trade Policy Considering Consumer Environmental Awareness," Sustainability, MDPI, vol. 14(9), pages 1-22, May.
    4. Zhai, Yue & Hua, Guowei & Cheng, Meng & Cheng, T.C.E., 2023. "Production lead-time hedging and order allocation in an MTO supply chain," European Journal of Operational Research, Elsevier, vol. 311(3), pages 887-905.
    5. Zhai, Yue & Cheng, T.C.E., 2022. "Lead-time quotation and hedging coordination in make-to-order supply chain," European Journal of Operational Research, Elsevier, vol. 300(2), pages 449-460.
    6. Pei Dang & Zhanwen Niu & Shang Gao & Lei Hou & Guomin Zhang, 2020. "Critical Factors Influencing the Sustainable Construction Capability in Prefabrication of Chinese Construction Enterprises," Sustainability, MDPI, vol. 12(21), pages 1-21, October.
    7. Zhai, Yue & Choi, Tsan-Ming & Shao, Saijun & Xu, Su Xiu & Huang, George Q., 2020. "Spatial-temporal hedging coordination in prefabricated housing production," International Journal of Production Economics, Elsevier, vol. 229(C).
    8. Wen Jiang & Yichao Hua & Meng Yuan & Igor Martek & Weiling Jiang, 2024. "Pricing Models under Three-Echelon Prefabricated Construction Supply Chains with Consumer Preferences," Sustainability, MDPI, vol. 16(2), pages 1-25, January.
    9. Tian Zhu & Guangchen Liu, 2022. "A Novel Hybrid Methodology to Study the Risk Management of Prefabricated Building Supply Chains: An Outlook for Sustainability," Sustainability, MDPI, vol. 15(1), pages 1-22, December.
    10. Muhammad Hamza & Rai Waqas Azfar & Khwaja Mateen Mazher & Basel Sultan & Ahsen Maqsoom & Shabir Hussain Khahro & Zubair Ahmed Memon, 2023. "Exploring Perceptions of the Adoption of Prefabricated Construction Technology in Pakistan Using the Technology Acceptance Model," Sustainability, MDPI, vol. 15(10), pages 1-25, May.

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