ABSTRACT NFV-based network implements a variety of network functions with software on general-purpose servers and this allows the network operator to select any capacity and location of network functions without any physical constraints. It is essential for economical NFV-based network design to determine the place where each network function should be located in the network and what its capacity should be. The authors proposed an algorithm of virtual routing function allocation in the NFV-based network for minimizing the network cost and provided effective allocation guidelines for virtual routing functions.