Pricing, crashing and coordination for prefabricated construction supply chain with the lead-time incentive: a power perspective

The perceived benefits of prefabrication may be offset by its low acceptance and uptake. This is exacerbated by uncertainties faced by manufacturers in which short lead-times result in both high crashing costs combined with demand opportunity loss to time-sensitive consumers. This study introduces a lead-time incentive mechanism into the prefabricated construction supply chain. The aim is to develop strategies that give supply chain stakeholders greater lead-time stability and higher profit, thereby attract more entrants. This paper explores a hypothetical two-echelon prefabricated construction supply chain consisting of an assembler and a manufacturer, employing Stackelberg and Nash game models. Findings confirm that lead-time incentives do indeed improve the profits of prefabricated construction manufacturers. However, the profits gained by prefabrication assemblers as well as the supply chain overall is contingent on consumer price sensitivity, where lower consumer price sensitivity is more conducive to profit optimization. Further, supply chain profit can be optimized under conditions of a global optimal model of complete cooperation. We show that the dynamic wholesale price contract and cost and revenue sharing contract effectively optimize enterprise decisions under variable circumstances.