Abstract The machine tool manufacturing involves wide complexity of operations and comprehensive experimental investigations. Lean manufacturing, a foremost waste cutting philosophy is therefore a potential and promising concept for the machine tool manufacturing industry. The present problem is identified while making a study in a medium sized machine tool factory called CLM. CLM has consistent order for 250–350 center lathes in a year. During the detailed study it was found that on an average CLM is able to dispatch only 150–175 machines even though the resources available are much more than required. The study also revealed that the production method used was group technology and the processing was based on batch quantity. There were about 16 variants for the product and that was one of the reasons for the delay in production. In addition, the specific requirements of the customers, the design changes and other spares manufacturing etc are also contributing factors restricting smooth production. Moreover, the cycle times at different workstations are not balanced and lot of time was wasted in the form of waiting, transportation and movement.