Forming partnerships in a virtual factory

In the evolving paradigm known as ‘agile operations’, conceptual and visionary descriptions are progressively becoming abundant. Rigorous treatments leading to operable solutions, on the other hand, are scarce and in need of development. Formation of partnerships ranging from rudimentary supplier type relationships to strategic alliances comprise an aspect of agile operations called the ‘virtual factory’ in the new paradigm. We develop a model to determine an optimal alliance of partners for executing a given project composed of a set of activities and their precedence network. Possible alliances amongst partners are given in a ‘partnership matrix’, induced by a set of operating characteristics for each partner. Using the above information we formulate the problem of assigning project activities to eligible partners so that every pair of adjacent activities is assigned to a pair of compatible (or allied) partners. Our objective is to minimize the project duration. Lower bounds and heuristic algorithms are developed for the above problem, that take advantage of a mathematical formulation and the structure of the problem. Supporting computational experiments are also reported.