Pricing, assembly rate optimizations and coordination for prefabricated construction supply chain with government subsidies

Abstract

Prefabricated construction, a sustainable construction method, has become the inevitable trend for the future development of the construction industry. The subsidy policies for prefabricated construction enterprises can influence their strategies to promote the development of prefabricated construction. The paper considers a two-echelon prefabricated construction supply chain consisting of a manufacturer and an assembler, aiming to investigate pricing and the assembly rate strategies and coordination under different subsidy objects. The findings demonstrate that subsidy policies can increase the assembly rate. When the government subsidizes the manufacturer, the wholesale price decreases with the subsidy rate, while subsidizing the assembler, the wholesale price does not change. The impacts of subsidy policies on the retail price depend on price sensitivity and the consumer preference for the prefabricated construction market. When the subsidy rates are equivalent, the profit of supply chain with subsidizing the assembler is greater than that with subsidizing the manufacturer. Finally, the paper proposes the revenue-cost sharing contract to coordinate prefabricated construction supply chain with government subsidies. A numerical study is carried out to verify conclusions, and illustrates that a certain range of subsidy affects positively prefabricated construction enterprises by adjusting the retail price and increasing the assembly rate.