Abstract
This paper addresses cell formation problem in an agile production environment considering machine modification. Having modifications applied, inter-cell movements and costs of purchasing new machines are considerably reduced. Using machine modification technology in cellular manufacturing system reduces the inter-cell movement and costs of purchasing new machines. Parts' demands determine the number of required machines in each period and thereby a proper decision can be made in regards to purchasing new machines and/or machine modification. Considering the customer satisfaction issue in the agile production systems, response time to customers is very important, machine modification approach can be applied with fewer costs and high degree of response (quick response) in these systems. Sensitivity analysis on the machine modification benefits shows the sensitivity of proposed model to this benefit.
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