Vehicle Routing Optimization Algorithms

9 min read


Vehicle routing optimization algorithms tools are the go-to time and cost management solutions for companies and drivers who have multiple destinations to cover. Route optimization is key in many parts of transportation and logistics, all the way from supply chain management to food delivery businesses and ride-sharing applications.

Planning a delivery route for your business can be hectic, especially for startups. Poor planning might have different trucks delivering goods to the same area leading to a waste of time and fuel. The main goal of vehicle routing is finding the best routes in terms of cost and distance for a fleet of vehicles.  Efficient routes increase productivity and ultimately profitability.

The last-mile delivery is the most critical part of the delivery process which should be effective and quick. Since it involves transporting goods from the warehouse or transportation hub to the client, the vehicle routing software is often key when attempting to maximize efficiency.

Vehicle routing optimization tools uses a set algorithm that run every route automatically

What is Route Optimization?

Credit Source: Wikimedia

Let’s say your truck or car has to go through a route with multiple stops. So, route optimization is the best route, effectively covering all destinations in minimum time and traveling. It saves time by planning the shortest distance the vehicle will travel while making all stops and increase cost-efficiency by reducing fuel consumption.

Almost every delivering or dispatching company requires route-optimizing software to provide their drivers and customers with quick and efficient services with minimum hassle. Companies like taxi on-demand, food delivery, laundry, courier, and others require constant route optimization to provide the service or product to their customers on time.

What Services Use Vehicle Routing Optimization?

Any company offering transportation, pickup, delivery, fleet management, logistics, or optimization services gains the most from vehicle routing optimization algorithms tools.

Route optimization software incorporates several aspects to help a business achieve maximum results. Some of the considerations that does into vehicle dispatching and route optimization algorithms include;

  • Type of vehicle used
  • Driver’s work schedules
  • The weather conditions
  • New routes and destinations
  • The distance to be covered
  • Number of stops required
  • Total distance to be covered
  • The number of turns and intersections on a particular route

Benefits of Vehicle Routing Optimization

Vehicle routing software and in general increasing the efficiency of vehicle fleets can have a huge impact on your bottom line. Here are some of the benefits of vehicle route optimization algorithms:

Reduced Cost of Operation

Minimizing the cost of operation in your business is one step towards maximizing profits. Vehicle routing optimization software will lower your expenditure costs in different ways. Optimized algorithms routes mean less driver time, increased efficiency, and ultimately savings on driving and employee pay.

Lower Fuel Expenditure

This is another reason why route optimization has an impact on your bottom line. Planning which vehicle or driver takes which route makes it possible for one driver to make several deliveries instead of having different drivers on the same route.  Fewer vehicles mean lower expenditure on fuel. Thus, route optimization software can have a fundamental impact on your fuel costs over time.

Reduced Cost of Labor

Having fewer vehicles on the road translates to fewer drivers. The drivers also complete their deliveries faster meaning you will have less salary burden to cover.

Less Vehicle Repair Costs

The vehicle routing optimization software maps the shortest route can take to their destination. Shorter routes translate to fewer miles meaning there will be reduced wear and tear and consequently reduced cost of maintenance.

Saves on Time

The route optimization software shows the shortest route possible to a certain destination. Drivers get to deliver goods to clients on time given the clear routes outlined by the software.

Company owners also spend little time trying to find the best truck and driver for a particular route since the software does the task automatically.

Increased Productivity

Vehicle routing optimization software allocates deliveries to the most suitable vehicles and drivers. The software considers the available service hours as per the HoS restrictions. Companies that use route optimization algorithms software make the best of every trip in terms of cost and time management leading to high productivity.

Improved Customer Experience

Businesses exist because of their customers. Earning clients’ loyalty can come from ensuring a fast and effective delivery every time a client makes an order.

Enhanced Company Reputation

Improved customer experiences go hand-in-hand with customer satisfaction and a better reputation. Offering high-quality goods and services while maintaining timely communication through route optimization creates a positive impact on your business.

Vehicle routing optimization helps a business to keep its clients in the loop during the entire delivery process. Engaging the clients and meeting their deadlines leads to a great reputation.

Common Vehicle Routing Optimization Algorithms

Vehicle routing optimization algorithms refer to the mathematical formula used in solving routing problems. Routing problems have been well-known in mathematics and computer science for a long time. Let’s take a look at some of the more popular vehicle routing problems below:

Traveling Salesperson Problem

The traveling salesperson problem (TSP) seeks the shortest route between a set of locations and points that have to be visited. The points refer to the cities a salesperson has to visit while he/she maintains the travel expenses and distance covered as low as possible.

According to Tech Target, instead of finding the most effective route, the TSP seeks the cheapest solution. It utilizes tools such as DNA sequencing and ride-sharing logistics to find the shortest and least expensive distance.

Most TSP solutions utilize heuristics which provide approximate results. Other algorithmic solutions used by TSP include Monte Carlo, brand and bound, and Las Vegas.

One of the issues with the TSP is that the shortest path does not always equal the least expensive route. When optimizing. routes in the real world, many other factors need to be taken into consideration, including traffic, driver directionality, delivery locations, speed limits, driver schedules, stops along the driving route, etc. The Traveling Salesperson Problem illustrates the issue of dispatching vehicles and assigning drivers to routes but does not necessarily solve it to optimize it for different business types.

Vehicle Routing Problem

Vehicle Routing Problem Refers (VRP) refers to the challenge encountered while finding optimal routes from a station or depot to multiple destinations. The destinations have different business-specific constraints such as;

  • Time windows
  • Dropped visits
  • Capacity constraints
  • Resource constraints

The goal of a Vehicle Routing Problem (VRP) is to find routes with minimal total distance for several vehicles visiting a set of locations. It aims at completing all deliveries within the shortest time possible.

Vehicle Routing Problem with Capacity Constraints

Capacity Constraints refers to capacitated vehicle routing problem (CVRP). CVRP is a vehicle routing problem where vehicles with a limited carrying capacity have to deliver or pick up items in different locations.

The quantity of the items varies in terms of volume and weight creating the challenge of picking up or delivering the items at minimum cost while making sure not to exceed the maximum capacity of the vehicles.

Vehicle Routing Problem with Time Windows (VRPTW)

Customers may be available to pick up an order at a specific time. The challenge falls on delivering or picking up an item before or at the time the customer has specified. The vehicle has to reach the client within the prioritized timeframe and should by no means fall behind schedule.

Scheduling rides within a given time window requires a company to find the most cost-effective way to make the deliveries.

Time windows may be in the form of;

  • Soft time window where there is a time to be paid if the vehicle violates the given time window.
  • Hard time window where the vehicle has to wait when it arrives before the customer-specified time.

According experts, VRPTW tools include services such;

  • Deliveries to stores and supermarkets
  • Postal deliveries
  • Collection of industrial refuse
  • Newspaper distribution
  • Bank deliveries
  • School bus routing
  • Security patrol

Vehicle Routing Problem with Resource Constraints

There is a need to place deliberate efforts toward resource allocation when handling vehicle routing problems. Resources could be renewable or non-renewable. Examples of renewable resources are manpower and machines while non-renewables include raw materials and money.

Resource constraints can be viewed in terms of depot capacity and depot usage. Depot capacity refers to the maximum number of delivery vehicles that can be loaded and unloaded simultaneously. Depot usage refers to the space required by each truck when loading or unloading.

Vehicle Routing with Dropped Visits

Some VRP which may occur within Time Window Constraints or Capacity Constraints include dropping nodes when there is no feasible solution. However, there is a penalty charged for every dropped visit.

A penalty is added to all the distance traveled when a visit is dropped to a given location.

The solver has to find the route which minimizes the entire distance plus the total penalties for all dropped locations.

Vehicle Routing Optimization and Your Business

Efficient distribution of goods and effective identification of routes to minimize the total distribution cost. The main routing goal is minimizing the travel time and distance to come up with a cost-effective route.

Route optimization helps companies to enhance their effectiveness and efficiency by optimizing several aspects per route such as;

  • Cost
  • Time spent
  • Distance covered
  • Number of stops
  • Fuels consumption
  • Number of vehicles

Business owners need to optimize delivery routes and driver routes to increase their ROIs.  Each of the algorithmic problems above calls for a different solution to optimize routes for a company.

Google Maps come in handy for every logistics service. The right mapping tools can help businesses cut down on their operational costs. Finding the most efficient routes for your drivers can heavily decrease costs and increase efficiency.

Time Windows and the Vehicle Routing Problem

According to a USA 2019 report, the estimated loss resulting from waiting for delivery services at home was $38 billion in 2011. Customers should indicate an exogenous time window comprising several available hours. A service provider may also provide a smaller endogenous time window to each customer.

Visualizing Optimized Routes

Companies may use software that factors in different variables such as time, traffic, location, and vehicle capacity using smart GPS. incorporating the multiple variables will help to map out the most optimized routes for the delivery trucks.

A visualized delivery route can create real-time re-optimization while sending automatic updates to the right drier.

Vehicle Routing Optimization & Driver Dispatching

Fleet managers may set rules which automate the process of assigning deliveries based on proximity and the distance to be covered. The automation will allow fleet managers to collect proof of delivery such as signatures, barcodes, and photos on their smartphones. Having vehicle route optimization tools at your fingertips will make your dispatchers more efficient at their jobs.

Custom Vehicle Routing Solutions

If you need to build custom vehicle routing software. We are experienced in handling vehicle routing issues and creating optimal solutions for different businesses. Contact Flatirons Development for help with vehicle routing.

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