The existing studies in the literature usually ignore the within-cell layout problem while forming part families and manufacturing cells. A new approach is proposed to solve the part-family and machine-cell formation problem and to determine the spatial arrangement of machines in each cell simultaneously. Furthermore, a dissimilarity measure between parts based on operation sequences is presented since the operation sequences not only specify the type of machine tools needed but also impact the flow of material. As a result, we can both minimize the material handling cost and streamline the material flow in each cell.
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