Network Functions Virtualization (NFV) is an upcoming paradigm where network functionality is virtualized and split up into multiple building blocks that can be chained together to provide the required functionality. This approach increases network flexibility and scalability as these building blocks can be allocated and reallocated at runtime depending on demand. The success of this approach depends on the existence and performance of algorithms that determine where, and how these building

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... ks are instantiated. In this paper, we present and evaluate a formal model for resource allocation of virtualized network functions within NFV environments, a problem we refer to as Virtual Network Function Placement (VNF-P). We focus on a hybrid scenario where part of the services may be provided by dedicated physical hardware, and where part of the services are provided using virtualized service instances. We evaluate the VNF-P model using a small service provider scenario and two types of service chains, and evaluate its execution speed. We find that the algorithms finish in 16 seconds or less for a small service provider scenario, making it feasible to react quickly to changing demand.