CM is the grouping of discrete multi-machines that produce part families with similar geometry or sequence of process and aims to improve manufacturing systems productivity. The methods/models used are classified into: array-based, clustering, mathematical programming based (viz., integer programming), graph theoretic, Multi-Criteria Decision-Making (MCDM) and artificial intelligence techniques. Fuzzy c-means clustering approach has been used to manufacturing cell formation problem by Chu and Hayya, this differs from a previous ones proposed by Xu and Wang, and later by Li and Ding, in the sense that Chu and Hayya use manufacturing routing data rather than design features in part family formation. Optimised cell formation, taking into account sequence of operations, alternative routing and part-volume together is not present in Chu and Hayya. Thus this paper focuses on stages selection of parts and part families generation, and selection of machines and process and grouping of these into cells in the design of a new manufacturing system considering sequence of operation, alternative routing and part-volume. One of the crucial steps in the design of a cellular manufacturing system is the cell formation problem, which involves grouping the parts into part families and machines into machine groups.