The virtualization and softwarization of modern computer networks enables the definition and fast deployment of novel network services called service chains: sequences of virtualized network functions (e.g., firewalls, caches, traffic optimizers) through which traffic is routed between source and destination. This paper attends to the problem of admitting and embedding a maximum number of service chains, i.e., a maximum number of source-destination pairs which are routed via a sequence of ` to-be-allocated, capacitated network functions. We consider an Online variant of this maximum Service Chain Embedding Problem, short OSCEP, where requests arrive over time, in a worst-case manner. Our main contribution is a deterministic O(log `)-competitive online algorithm, under the assumption that capacities are at least logarithmic in `. We show that this is asymptotically optimal within the class of deterministic and randomized online algorithms. We also explore lower bounds for offline approximation algorithms, and prove that the offline problem is APX-hard for unit capacities and small ` ≥ 3, and even PolyAPX-hard in general, when there is no bound on `. These approximation lower bounds may be of independent interest, as they also extend to other problems such as Virtual Circuit Routing. Finally, we present an exact algorithm based on 0-1 programming, implying that the general offline SCEP is in NP and, by the above hardness results, it is NP-complete for constant `.

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