This paper introduces a new method for clustering data using a dynamic
scheme. An appropriate partitioning is obtained based on both a dissi
milarity measure between pairs of entities as well as a dynamic proced
ure of splitting. A dissimilarity function is defined by using the cos
t of the optimum path from a datum to each entity on a graph, with the
cost of a path being defined as the greatest distance between two suc
cessive vertices on the path. The procedure of clustering is dynamic i
n the sense that the initial problem of determining a partition into a
n unknown number of natural groupings has been reduced to a sequence o
f only two class splitting stages. Having arisen from any particular a
pplication, the proposed approach could be effective for many domains,
and it is especially successful to identify clusters if there is lack
of prior knowledge about the data set. The usefulness of the dynamic
algorithm to deal with elongated or non-piecewise linear separable clu
sters as;well as sparse and dense groupings is demonstrated with sever
al data sets.