The purpose of this paper is to develop an efficient p-median approach appl
icable to large cell formation (CF) problems. A two-phase methodology that
seeks to minimize the number of exceptional elements is proposed. In phase
I, two efficient p-median formulations which contain fewer binary variables
than existing p-median formulations are constructed. For a CF problem with
111 machines existing p-median formulations contains m(2) or more binary v
ariables, whereas the new formulation proposed in phase I contains not more
than 5m binary variables at the expense of a slightly increased number of
continuous variables and constraints for practical values of p less than 32
. This makes it possible to implement large CF problem within reasonable co
mputer runtime with commercially available linear integer programming codes
. Given the initial cell configuration found with the new p-median formulat
ion, in phase II bottleneck machines and parts are reassigned to reduce the
number of exceptional elements. This procedure has the flexibility of prov
iding the cell designer with alternative solutions. Test results on large C
F problems show a substantial increase in the efficiency of the new p-media
n formulations compared with existing p-median formulations.