Pricing and Advance Ordering Strategy for Prefabricated Building Assembler

Abstract

This paper studies an advance order strategy for prefabricated building assembler. We study how advance strategy affect assembler’s profit, and assembler how to choose strategy to meet consumer demand. In contrast to much of the literature, we introduce time sensitivity of consumer into the demand function, and divide prefabricated components into standard and nonstandard components to highlight the characteristics of prefabricated building. Furthermore, we present two different order strategies. In one strategy, assembler orders all components once costumers’ order arrives in one time, consumer have longer waiting time. In another strategy, assembler orders standard components in advance and orders nonstandard components until consumers’ order arrives. Our results show that assembler can make decision in different situations to achieve optimal profit, and satisfy consumer demand.