An Optimisation Model for Partner Selection in Virtual Organisations

In this paper, we consider the problem of partner selection in a virtual organisation (VO); specifically, we develop mixed integer linear programming (MILP) models to support the configuration of VOs in a virtual organisation breeding environment (VBE). Apart from the basic model which focuses on the minimisation of total fixed and variable costs we present extensions which capture transportation costs, elaborate alternative measures for capacity risk, and account for inter-organisational dependencies due to an earlier collaboration history. Computational experiments suggest that our MILP models are tractable for problems of reasonable size and consequently potentially useful for VO decision making.