Dynamic Vehicle Dispatching: Optimal Heavy Traffic Performance and Practical Insights

We analyze a general model of dynamic vehicle dispatching systems in which congestion is the primary measure of performance. In the model, a finite collection of tours are dynamically dispatched to deliver loads that arrive randomly over time. A load waits in queue until it is assigned to a tour. This representation, which is analogous to classical set-covering models, can be used to study a variety of dynamic routing and load consolidation problems. We characterize the optimal work in the system in heavy traffic using a lower bound from our earlier work (Gans and van Ryzin 1997) and an upper bound which is based on a simple batching policy. These results give considerable insight into how various parameters of the problem affect system congestion. In addition, our analysis suggests a practical heuristic which, in simulation experiments, significantly outperforms more conventional dispatching policies. The heuristic uses a few simple principles to control congestion, principles which can be easily incorporated within classical, static routing algorithms.