A robust cell formation approach for varying product demands

In cellular manufacturing environments, manufacturing cells are generally formed based on deterministic product demands. In this paper, we consider a system configuration problem with product demands expressed in a number of probabilistic scenarios. An optimization model integrating cell formation and part allocation is developed to generate a robust system configuration to minimize machine cost and expected inter-cell material handling cost. A two-stage Tabu search based heuristic algorithm is developed to find the optimal or near optimal solutions to the NP-hard problem. Numerical examples show that this model leads to an appropriate compromise between system configuration costs and expected material handling costs to meet the varying product demands. These example problems also show that the proposed algorithm is effective and computationally efficient for small or medium size problems.