The presented mathematical model is used to form machine cells, optimize costs of exceptional elements and design the shop floor layout for various demands of components. The complete similarity measure algorithm forms machine cells and part families in a refined form. Later, exceptional elements are eliminated in linear programming optimization model by using machine duplication and part subcontract. Then the shop floor layout is designed to have optimized material movements between cells and within a cell. The performance evaluation of cell formation algorithm is done on case studies of various batch sizes to give the process capability compared with other similar methods. The result from a linear programming optimization model is cost savings, machines duplicated, parts subcontracted, inter intra cellular movements. Finally, the output of inbound facility design is the floor layout which has machine cell clusters with optimized floor area.