Optimal Partner Selection in Virtual Organisations With Capacity Risk and Network Interdependencies ∗

In this paper, we consider how the selection of partners in a virtual organisation (VO) can be assisted through mixed integer linear programming (MILP) models, when the configuration of VOs is based on a virtual organisation breeding environment (VBE). Apart from our basic model – which focuses on the minimisation of fixed and variable costs – we present extensions that accommodate transportation costs, alternative measures for capacity risk, and inter-organisational dependencies due to an earlier collaboration history. A real case study and computational experiments suggest that our MILP models are tractable for problems of reasonable size and useful in VO decision making.

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