An Approximate Dynamic Programming Algorithm for Large-Scale Fleet Management: A Case Application

• Published in: Transportation science 2009-05, Vol.43 (2), p.178-197
• Main Authors: Simao, Hugo P, Day, Jeff, George, Abraham P, Gifford, Ted, Nienow, John, Powell, Warren B
• Format: Article
• Language: English
• Subjects: Aggregation; Algorithms; approximate dynamic programming; Approximation; driver management; Dynamic programming; Estimates; Fleet management; Freight; Load; Logistics; Marginal value; Modeling; Motor carriers; Motor vehicle fleets; Objective functions; Optimization; Programming; Road transport; Simulation; Simulation training; Studies; Transport economics; Transportation; Trucking; truckload trucking; Trucks; U.S.A
• ISSN: 0041-1655; 1526-5447
• DOI: 10.1287/trsc.1080.0238

We addressed the problem of developing a model to simulate at a high level of detail the movements of over 6,000 drivers for Schneider National, the largest truckload motor carrier in the United States. The goal of the model was not to obtain a better solution but rather to closely match a number of operational statistics. In addition to the need to capture a wide range of operational issues, the model had to match the performance of a highly skilled group of dispatchers while also returning the marginal value of drivers domiciled at different locations. These requirements dictated that it was not enough to optimize at each point in time (something that could be easily handled by a simulation model) but also over time. The project required bringing together years of research in approximate dynamic programming, merging math programming with machine learning, to solve dynamic programs with extremely high-dimensional state variables. The result was a model that closely calibrated against real-world operations and produced accurate estimates of the marginal value of 300 different types of drivers.