One of the advances in computer-aided production is the application of computer control to automated material handling systems. Computer control is especially important to Automated Guide Vehicles (AGVs) since their control problems are more complicated than those of traditional automated material handling systems, e.g., conveyors. Of the many design and control issues of AGVs, an important one is the prevention of vehicle collision. Many traditional vehicle-collision prevention strategies are the so-called zone strategies that divide guide paths into several non-overlapping zones, and restrict the presence of at most one vehicle in any zone at any time. In this paper, the concept of a new vehicle-collision prevention strategy called `dynamic-zone strategy' will be introduced. Detailed procedures based on this new strategy will be proposed for an AGV system with a single-loop guide path. Traditional zone strategies ar fixed-zone strategies in which the zone assigned to each vehicle cannot be changed and vehicles are not allowed to help each other. As a result, fixed-zone strategies often have the disadvantage of not being able to satisfy the transportation demand whenever there is a load imbalance between vehicles. The objective of this paper is to develop a strategy that not only can prevent the collision of vehicles but also can avoid the disadvantage of fixed-zone strategies. To accomplish this, the proposed strategy relies on two procedures - Zone Adjustment Procedure and Zone Assistance Procedure. With Zone Adjustment Procedure, the area of each zone will be changed according to the current production demand. On the other hand, with Zone Assistance Procedure, vehicles are allowed to help each other so that the workload of every vehicle is balanced all the time. The methods of these two procedures will be developed in this paper. In addition, a Simulated Annealing (SA)-based zone-division design method that can find near-optimal zone-division designs will be also be proposed in this paper. Experiments are then conducted to show that the proposed dynamic-zone strategy and the proposed zone-division design method are indeed beneficial to the throughput performance of production systems.