Background/Objectives: The adoption of cellular manufacturing becomes promising manufacturing philosophy to address the problems of today’s manufacturing plants such as an increasingly turbulent environment and rising customer requirements. Method/Statistical Analysis: Group Technology and Cellular Manufacturing System (CMS) have together paved way for the same through processing of similar parts groups as part families and the formation of a machine cell dedicated for the manufacture of the part family. The traditional CMS design methods do not incorporate many real-life manufacturing parameters such as batch size and machine flexibility, various cost factors at the design stage and also they are not taking the advantage of the machine flexibility in terms of coexistence of alternate process routing. Findings: In this work, a comprehensive mathematical model has been developed capturing these exact production parameters. An optimal solution is obtained using Lingo 8.0 software package and a solution methodology of best possible cell configurations is formed. Applications/Improvements: The effect of considering the alternate process routing in the design stage of CMS is evaluated and it is found that routing flexibility results in better cell configurations.