Abstract: Based on artificial life principle of 'bottom to up model' and the food-chain phenomena in ecology, a new type of artificial life based algorithm is proposed and referred to as food-chain algorithm. Then, the algorithm is applied to solving the supply-chain operation management problems involving partner selection and relevant productive capacity in an enterprise alliance. Both how an enterprise alliance selects its partners to form the alliance and how a member enterprise adjusts its productive capacity to meet the future market demand can be simulated by the food-chain algorithm. The algorithm can effectively figure out the distributive problems as above. In addition to them, the algorithm can be applied to other problems of supply-chain management, such as the location-allocation problem.