A dynamic model for optimally switching transit service types under demand uncertainty is proposed for “smart transit” applications and for operating shared autonomous transit fleets. The model assumes a region that requires last-mile transit service either with fixed-route buses or flexible-route, on-demand buses. To consider the uncertain evolution of demand density over time, an Ornstein-Uhlenbeck process is used. The optimal policy is determined by solving the switching problem as a market entry and exit real options model. The analysis using the model on a benchmark computational example illustrates the presence of a hysteresis effect, an indifference band that is sensitive to transportation system state and demand parameters, as well as the presence of switching thresholds that exhibit asymmetric sensitivities to transportation system conditions. The proposed policy is computationally compared in a 24-hour simulation to a “perfect information” set of decisions and a myopic policy that has been dominant in the flexible transit literature, with results that suggest the proposed policy can reduce by up to 72% of the excess cost in the myopic policy. Computational experiments of the “modular vehicle” policy demonstrate the existence of an option premium for having flexibility to switch between two vehicle sizes.

Dr. Qianwen Guo is an Assistant Teaching Professor of Transportation Engineering in the Department of Civil and Environmental Engineering at the Florida A&M University-Florida State University (FAMU-FSU) College of Engineering. Prior to her current appointment, she was a Postdoctoral Research Associate at the University of Maryland, College Park from 2016 to 2018. Dr. Guo has broad research interests in transportation systems optimization problems, especially in public transit, ridesharing, phased development of civil infrastructure systems, as well as transportation economics. She has published more than ten papers on a wide range of research topics as the first author or corresponding author in renowned transportation journals, including Transportation Research Parts A, B and C. She has also been involved in federal and state funded projects in various roles. In addition, Dr. Guo has hands-on experience teaching and advising students from diverse backgrounds. She regularly teaches a few civil engineering courses, such as Introduction to Transportation Engineering, Traffic Engineering, and Introduction to Geomatics Engineering. She was featured by the Society of Asian Scientists & Engineers on the 2021 World Engineering Day at the FAMU-FSU College of Engineering.