RETRACTED: ABSTRACTPresently, most of the companies have combination of process and product layout. Cellular manufacturing is a place where company has established one or more manufacturing cells. Due to competition, Automobile industries are changing existing plant layout to “Cellular Layout” in which manufacturing process is carried out by proper arrangement of machines. This research paper aims at the optimization of cellular manufacturing layout using: cell formation stage, cell layout stage. In the first stage, a heuristic based upon the material flow is developed, which allows the machines to be clustered more naturally. In the second stage, a genetic algorithm is used to optimize the machine layout within each cell, in which a previously defined material handling system is provided. This representation allows the design of the layout and aisle-structure simultaneously, and can be converted into a string representation adaptable by a genetic algorithm for optimization. The number of aisles in the optimized aisle-structure is also minimized. A computational experiment was carried out based upon solving three problems from the literature. The results showed that cell configuration and layout planning should be considered simultaneously. Finally, an outline of an integrated design method for whole system optimization is provided.