Multi-period hedging and coordination in a prefabricated construction supply chain

Yue Zhai, Yelin Fu, Gangyan Xu and George Huang

International Journal of Production Research, 2019, vol. 57, issue 7, 1949-1971

Abstract: In this paper, a multi-period buffer space hedging coordination between a building contractor (BC) and a logistics provider (LP) is investigated. In order to facilitate the application of the construction lead-time hedging (CLTH) strategy, adopted by the BC, extra buffer space needs to be reserved at LP’s intermediate warehouse for contingency usage. This strategy is defined as ‘buffer space hedging (BSH)’ and it increases the pressure of LP on involving extra storage and maintenance cost. Two coordination mechanisms are adopted for solving this BSH problem. One scheme is by introducing a cost-sharing term. A Nash game model is studied to find the individual optimal decisions. Another scheme is a cooperative game model with proper side-payments. We show that adjusting the BSH amount for each review period benefits the supply chain. Both coordination mechanisms enable a win–win outcome. Especially, if system resources are sufficient, the cooperative game outperforms the Nash game. Numerical experiments further demonstrate that the benefit of the proposed model is more significant under the case with lower unit enlarging/rearrangement cost, higher tardiness penalty and unpredictable and uncontrollable construction process-determined assembled and installed prefabs.

Date: 2019
References: Add references at CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://hdl.handle.net/10.1080/00207543.2018.1512765 (text/html)
Access to full text is restricted to subscribers.

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:taf:tprsxx:v:57:y:2019:i:7:p:1949-1971

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/TPRS20

DOI: 10.1080/00207543.2018.1512765

Access Statistics for this article

International Journal of Production Research is currently edited by Professor A. Dolgui

More articles in International Journal of Production Research from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().