Abstract This paper presents a new approach to formation of part families and machine cells based on similarities of part design and/or manufacturing. This is a crucial step for applications of Group technology (GT) to cellular manufacturing systems. For the last two decades there have been many algorithms developed for the formation of manufacturing cells. One of the fundamental characteristics of the algorithms is an employment of components-machines charts or 0–1 incidence matrices which are based on the concept of production flow analysis. In a real production environment the problem is usually more complex: some advanced machines have more operational functions than the others, some components can be manufactured in several process plans, and the number of machines available for each type of machine may be also different. Therefore, a single component-machines chart or matrix cannot completely represent the problem; consequently, the available algorithms cannot be directly used to solve the problem. In this paper, an extensive literature survey of the available algorithms for the design of machine cells is presented and problems are analyzed. A new solution approach is proposed to tackle the problems. The approach is divided into two stages: (1) a clustering algorithm for part families grouping based on process similarities; and (2) cells formation based on the similarities of the machine's operational functionalities, and formed part families. The problem is represented by two 0–1 incidence matrices; one contains information of components and processes (not machines) and the other machines-processes relations. The output of the algorithm consists of formed machine cells and part families. The approach is not only used to solve the complex cases of formation problems, but is also suitable to solve ordinary 0–1 machines-components problems, which are the simplest cases. An example is presented to illustrate the approach.
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