Machine is the key element in manufacturing system. Machine failure will lead to order delivery delay and production cost rise. Aiming at the random disturbance of equipment failure, a dynamic non-linear programming model of virtual manufacturing cell (VMC) is established, which aims to minimize the equipment cost, logistics transportation cost, delay delivery cost and the differences of workload among cells, based on the comprehensive consideration of equipment reliability, process route constraints, variable processing path and workload. Due to the high complexity of the problem, the hybrid particle swarm optimization algorithm is used to solve the model, and the rationality and effectiveness of the method are verified by a numerical example. Experimental results show that this method has advantages in reducing the cost of cell reconfiguration, improving the utilization of equipment and shortening the completion time.