AbstractAlthough there are numerous studies that address the problems of optimal machine grouping and part family classification for cellular manufacturing, little research has been reported that studies the conditions where cellular manufacturing is appropriate. Flynn (1984) was one of the first to address this issue through a simulation modeling study, and although she did not specifically control for the effect of intercell flow, i.e., the proportion of operations that must be completed for a part outside its assigned cell, the models developed in this study resulted in large amounts of intercell flow. More recently, Morris and Tersine (1990) also addressed the desirability of cellular manufacturing under select manufacturing environments, but their models assumed that no intercell flow was present. In practice, some intercell flow will typically occur after a large‐scale conversion unless many additional machines are purchased to allow each cell to process the complete set of tasks for all parts in a family. In our study, we seek to fill the gaps between the prior simulation studies of cellular manufacturing system performance. We do this by 1) illustrating the negative impact of low to medium intercell flow levels when operating in a wide range of cellular manufacturing environments, and 2) indicating how changes in other operating factors caused by the conversion of a job shop to cellular manufacturing may counter the negative impact of intercell flow. Indeed, we show that many conditions exist where cellular manufacturing can achieve better system performance than a traditional job shop. However, our experiments also point out, like the previous studies, that a conversion to cellular manufacturing can easily degrade system performance—unless other environmental factors are simultaneously changed to counter the negative impact of intercell flow and other problems caused by conversion to cellular manufacturing.Simulation experiments were designed to accomplish these two objectives. We tested the effect of independent variables including intercell flow level, setup time, run time variability, batch size, material handling time, the reduction of setup time made possible by conversion to cellular manufacturing, and product‐mix stability. We found that a conversion to cellular manufacturing is a good alternative to job shop manufacturing when the conversion results in much lower run time variability or in a great reduction in setup times, or when small batch sizes are deemed necessary by management. Further, we found that, in many cases, the performance of cellular manufacturing as measured by mean flow time or work‐in‐ process inventory is better than that of a job shop when the conversion to cellular manufacturing results in a low level of intercell flow—even when other operating factors do not improve after the conversion. This notion substantiates the objective of many cell formation techniques to minimize the level of intercell flow. Finally, we showed that the effect of product‐mix variation is most detrimental to system performance when operating in a cellular manufacturing mode.
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