IDEAS home Printed from https://ideas.repec.org/a/taf/tprsxx/v55y2017i14p3984-4002.html
   My bibliography  Save this article

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

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/00207543.2016.1231432
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/00207543.2016.1231432?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Cobb, Barry R. & Johnson, Alan W., 2014. "A note on supply chain coordination for joint determination of order quantity and reorder point using a credit option," European Journal of Operational Research, Elsevier, vol. 233(3), pages 790-794.
    2. Leng, Mingming & Zhu, An, 2009. "Side-payment contracts in two-person nonzero-sum supply chain games: Review, discussion and applications," European Journal of Operational Research, Elsevier, vol. 196(2), pages 600-618, July.
    3. Zhou, Yong-Wu & Min, Jie & Goyal, Suresh K., 2008. "Supply-chain coordination under an inventory-level-dependent demand rate," International Journal of Production Economics, Elsevier, vol. 113(2), pages 518-527, June.
    4. Zhu, Stuart X., 2015. "Integration of capacity, pricing, and lead-time decisions in a decentralized supply chain," International Journal of Production Economics, Elsevier, vol. 164(C), pages 14-23.
    5. Hu, Yinan & Guan, Yongpei & Liu, Tieming, 2011. "Lead-time hedging and coordination between manufacturing and sales departments using Nash and Stackelberg games," European Journal of Operational Research, Elsevier, vol. 210(2), pages 231-240, April.
    6. Pan, Jason Chao-Hsien & Lo, Ming-Cheng & Hsiao, Yu-Cheng, 2004. "Optimal reorder point inventory models with variable lead time and backorder discount considerations," European Journal of Operational Research, Elsevier, vol. 158(2), pages 488-505, October.
    7. Devangan, Lokendra & Amit, R.K. & Mehta, Peeyush & Swami, Sanjeev & Shanker, Kripa, 2013. "Individually rational buyback contracts with inventory level dependent demand," International Journal of Production Economics, Elsevier, vol. 142(2), pages 381-387.
    8. Yeo, K.T. & Ning, J.H., 2006. "Managing uncertainty in major equipment procurement in engineering projects," European Journal of Operational Research, Elsevier, vol. 171(1), pages 123-134, May.
    9. Kaur Arshinder & Arun Kanda & S. G. Deshmukh, 2011. "A Review on Supply Chain Coordination: Coordination Mechanisms, Managing Uncertainty and Research Directions," International Handbooks on Information Systems, in: Tsan-Ming Choi & T.C. Edwin Cheng (ed.), Supply Chain Coordination under Uncertainty, pages 39-82, Springer.
    10. Heydari, Jafar, 2014. "Lead time variation control using reliable shipment equipment: An incentive scheme for supply chain coordination," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 63(C), pages 44-58.
    11. Yunzeng Wang & Yigal Gerchak, 2001. "Supply Chain Coordination when Demand Is Shelf-Space Dependent," Manufacturing & Service Operations Management, INFORMS, vol. 3(1), pages 82-87, August.
    12. Rema Hariharan & Paul Zipkin, 1995. "Customer-Order Information, Leadtimes, and Inventories," Management Science, INFORMS, vol. 41(10), pages 1599-1607, October.
    13. Leng, Mingming & Parlar, Mahmut, 2009. "Lead-time reduction in a two-level supply chain: Non-cooperative equilibria vs. coordination with a profit-sharing contract," International Journal of Production Economics, Elsevier, vol. 118(2), pages 521-544, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zeng, Nengmin & Wu, Guangdong & Zeng, Dongling & Liu, Ang & Ren, Tinghai & Liu, Bingsheng, 2023. "Optimal mechanism for project splitting with time cost and asymmetric information," International Journal of Production Economics, Elsevier, vol. 264(C).
    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.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zhai, Yue & Zhong, Ray Y. & Huang, George Q., 2018. "Buffer space hedging and coordination in prefabricated construction supply chain management," International Journal of Production Economics, Elsevier, vol. 200(C), pages 192-206.
    2. 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).
    3. 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.
    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. Xiao, Tiaojun & Choi, Tsan-Ming & Cheng, T.C.E., 2016. "Delivery leadtime and channel structure decisions for make-to-order duopoly under different game scenarios," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 87(C), pages 113-129.
    6. Wu, Zhengping & Zhai, Xin & Liu, Zhongyi, 2015. "The inventory billboard effect on the lead-time decision," International Journal of Production Economics, Elsevier, vol. 170(PA), pages 45-53.
    7. Li, Xin & Lian, Zhaotong & Choong, Kwee Keong & Liu, Xiaoming, 2016. "A quantity-flexibility contract with coordination," International Journal of Production Economics, Elsevier, vol. 179(C), pages 273-284.
    8. Longfei He & Baiyun Yuan & Junsong Bian & Kin Keung Lai, 2023. "Differential game theoretic analysis of the dynamic emission abatement in low-carbon supply chains," Annals of Operations Research, Springer, vol. 324(1), pages 355-393, May.
    9. Saha, S. & Goyal, S.K., 2015. "Supply chain coordination contracts with inventory level and retail price dependent demand," International Journal of Production Economics, Elsevier, vol. 161(C), pages 140-152.
    10. Liang, Guitian & Gu, Chaocheng, 2021. "The value of target sales rebate contracts in a supply chain with downstream competition," International Journal of Production Economics, Elsevier, vol. 242(C).
    11. Lee, Chang Hwan & Rhee, Byong-Duk & Cheng, T.C.E., 2013. "Quality uncertainty and quality-compensation contract for supply chain coordination," European Journal of Operational Research, Elsevier, vol. 228(3), pages 582-591.
    12. Sajjad Aslani Khiavi & Hamid Khaloozadeh & Fahimeh Soltanian, 2021. "Suboptimal sliding manifold For nonlinear supply chain with time delay," Journal of Combinatorial Optimization, Springer, vol. 42(1), pages 151-173, July.
    13. Heydari, Jafar, 2014. "Lead time variation control using reliable shipment equipment: An incentive scheme for supply chain coordination," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 63(C), pages 44-58.
    14. Songtao Zhang & Yanting Hou & Siqi Zhang & Min Zhang, 2017. "Fuzzy Control Model and Simulation for Nonlinear Supply Chain System with Lead Times," Complexity, Hindawi, vol. 2017, pages 1-11, September.
    15. Devangan, Lokendra & Amit, R.K. & Mehta, Peeyush & Swami, Sanjeev & Shanker, Kripa, 2013. "Individually rational buyback contracts with inventory level dependent demand," International Journal of Production Economics, Elsevier, vol. 142(2), pages 381-387.
    16. Amit, R.K. & Mehta, Peeyush & Tripathi, Rajeev R., 2015. "Optimal shelf-space stocking policy using stochastic dominance under supply-driven demand uncertainty," European Journal of Operational Research, Elsevier, vol. 246(1), pages 339-342.
    17. Ke Ma & Sébastien Thomassey & Xianyi Zeng, 2020. "Development of a central order processing system for optimizing demand-driven textile supply chains: a real case based simulation study," Annals of Operations Research, Springer, vol. 291(1), pages 627-656, August.
    18. Tiwari, Sunil & Kazemi, Nima & Modak, Nikunja Mohan & Cárdenas-Barrón, Leopoldo Eduardo & Sarkar, Sumon, 2020. "The effect of human errors on an integrated stochastic supply chain model with setup cost reduction and backorder price discount," International Journal of Production Economics, Elsevier, vol. 226(C).
    19. Noori-Daryan, Mahsa & Taleizadeh, Ata Allah & Jolai, Fariborz, 2019. "Analyzing pricing, promised delivery lead time, supplier-selection, and ordering decisions of a multi-national supply chain under uncertain environment," International Journal of Production Economics, Elsevier, vol. 209(C), pages 236-248.
    20. Liberopoulos, George, 2008. "On the tradeoff between optimal order-base-stock levels and demand lead-times," European Journal of Operational Research, Elsevier, vol. 190(1), pages 136-155, October.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:tprsxx:v:55:y:2017:i:14:p:3984-4002. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/TPRS20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.