AbstractMany existing solution methodologies for machine assignment problems in group technology do not consider factors such as part demand, operation sequence and cost of intercellular moves. We formulate a 0-1 quadratic programming model that takes into account these factors in machine assignment. Two approaches are proposed to solve this problem. The first is an A*-based approach that generates optimal solutions. The second is a heuristic approach developed to solve problems with large number of machines and/or parts. The heuristic approach is shown to be efficient in producing good solutions in a computational study.