We consider a real-world machine grouping and layout problem in which
the objective is not only to identify machine cells and corresponding
part families but also to determine a near-optimal layout of machines
within each cell and the cells themselves. The three-stage approach de
veloped incorporates materials flow considerations while determining m
achine groups, considers alternative process plans, exploits part rout
ing information and allows the user to perform sensitivity analysis. T
he menu-driven, interactive program has been applied to four test prob
lems and an industrial problem. Our experience with applying the appro
ach to the industrial problem is also reported.