A methodology is proposed to design a GT cell by considering the intercell parts flow in GT cellular manufacturing systems. The problem of GT cell formation is described in a graph using the quantities to be produced in the specified time period and the process routes for producing the products. The objective of this paper is to minimize the total number of parts produced in more than one cell. The problem, formulated as a quadratic assignment problem (QAP), is solved using both Lagrangean relaxation technique and the optimality conditions of quadratic program. Furthermore, in order to obtain the giobal optimal solution rather than the local optimal solution, a branch-and-bound algorithm is employed. Finally, numerical examples are used to show the effectiveness of the solution techniques and GT cell formation procedure. Moreover, a computer simulation is presented, showing the effectiveness of cellular manufacturing systems