In this paper we consider a practical scheduling problem commonly arising f
rom batch production in a flexible manufacturing environment. Different par
t-types are to be produced in a flexible manufacturing cell organized into
a two-stage production line. The jobs are processed in batches on the first
machine. and the completion time of a job is defined as the completion tim
e of the batch containing it. When processing of all job?, in a batch is co
mpleted on the first machine, the whole batch of jobs is transferred intact
to the second machine. A constant setup time is incurred whenever a batch
is formed on any machine. The tradeoff between the setup times and batch pr
ocessing times gives rise to the batch composition decision. The problem is
to find the optimal batch composition and the optimal schedule of the batc
hes so that the makespan is minimized. The problem is shown to be strongly
NP-hard. We identify some special cases by introducing their corresponding
solution methods. Heuristic algorithms are also proposed to derive approxim
ate solutions. We conduct computational experiments to study the effectiven
ess of the proposed heuristics. (C) 2000 John Wiley & Sons, Inc.