Buffer space hedging and coordination in prefabricated construction supply chain management

Yue Zhai, Ray Y. Zhong and George Q. Huang

International Journal of Production Economics, 2018, vol. 200, issue C, 192-206

Abstract: This paper studies a coordination scheme to solve a buffer space hedging (BSH) issue in the prefabricated construction supply chain management (PCSCM). To hedge against unfavorable impacts caused by improper delivery of prefab, the project contractor requires the transportation company to reserve some buffer space in its intermediate warehouse for contingent use (holding safety stock and/or keeping idle). This is termed as BSH strategy. However, this strategy may impact the operation efficiency and potential profit loss for the transportation company. A balance must be kept through a BSH coordination mechanism. Two terms are involved in this mechanism: a BSH amount related cost term is charged by the transportation company to the project contractor and a constant transfer term is used to fairly allocate the system surplus. Three models with different power structures are used to examine the balance. For uneven power settings, two Stackelberg games with alternative decision making sequences are studied. For the equal power setting, a Nash game is presented. It is observed that the proposed coordination mechanism is able to reduce the required BSH amount with win-win coordination. Some interesting managerial implications are also obtained from comparison analysis and numerical studies.

Keywords: Prefabricated construction; Supply chain management; Buffer space hedging; Game theory; Supply chain coordination (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0925527318301385
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:200:y:2018:i:c:p:192-206

DOI: 10.1016/j.ijpe.2018.03.014

Access Statistics for this article

International Journal of Production Economics is currently edited by Stefan Minner

More articles in International Journal of Production Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().