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as competence, availability, etc. [Qinhe Zheng, 2001] There are three type of agents in our model, the initiator agent (the developer), individual worker agent (an agent that is capable of partial process), and the buyer agent. The initiator agent is the one who takes the initiative in the formation of a virtual organization and is responsible for task allocation and management during the operation. An individual agent is a self-sustained entity, it may receive service request directly from the buyer and is free to join any virtual organization. The buyer agent is the simplest one; its sole purpose is to send service request to any virtual organization or any individual agent. A real estate developer, named Concrete Developer, has recently won the right to develop a large suburban area for residential use. Concrete Developer has always relied on a single outside contractor, who in turn enlists a group of sub-contractors, to construct the residential buildings.

THE FORMATION AND OPERATION PROCESS

Details in the VO’s formation and operation process, including how to form a VO and how individual agents make decisions, and how those decisions affect the VO is described in this section.

NEGOTIATION PROTOCOL

In our model, the proposal sent by the initiator agent includes the following information: the type of task (building construction) needed for the organization, the estimated work load for each type of subtask (partial processes), and the estimated profit of the organization. When the initiator is planning to make the initial proposal, it needs a set of evaluating criteria to select the most favorable group of members (each member has a set of attributes, such as the cost and the quality of task performance, and its availability, etc.). A negotiation protocol is needed for both the initiator and the individual agents in support of their decision making during the formation phase.

PARTNER SELECTION PROCESS

To find the members, we could first search for an agent that will deliver a partial process, then continue looking for other agents that are able to deliver those complementary services, and so on. Before the proposal can be made, the initiator needs to decompose the whole product/service process into several partial processes. Usually this can be done by human being assisted here we assume that it has already been done. Once the initiator agent has identified the partial processes, the partial processes will be distributed to the agents so that each agent can make its own contribution depending on its specialty, hence an allocation process is needed. [Mark Sims, 2003]

PENALTIES FOR LACK-OF-COMMITMENT

To react relationally toward the penalty of lack-of commitment, the agent needs to incorporate the penalty policy into its local decision making process. Therefore, an enterprise may need an incentive to encourage the agents to maximize the profit of the enterprise. During the bidding process, an agent is required to specify the number of the partial processes it is capable/willing to perform to a virtual organization. However, during operation phase the agent may, in self-interested fashion, favor other opportunities and leave the commitment to the virtual organization unfulfilled. Unless there is a mutual trust established among the member companies, esp