Using penalty function and Tabu search to solve cell formation problems with fixed cell cost

In this paper, an integrated approach for manufacturing cell formation with fixed charge cost is presented. The solution of the problem includes not only cell formation decisions but also cell set-up decisions. A mixed integer non-linear programming model is formulated to solve the problem. The NP-hardness of the problem makes direct solution computationally prohibitive for real-life applications. A heursitic algorithm was developed to solve the problem efficiently based on the features of the model and model duality analysis. Tabu search was used to find the optimal or sub-optimal solutions of the problem. Numerical examples are presented.