In this thesis, we develop a mathematical model that integrates distributed layout and cell formation configurations in manufacturing systems. The proposed model incorporates a number of operational attributes such as sequence of operations, lot splitting, alternative process plans, and detailed relationships between pairs of locations along with material handling and product flow costs to determine Intra and Inter-cell layout configurations. Good solution quality for the proposed mathematical model can only be found for small size problems because of NP-complexity. To solve the model for large size problems, an efficient simulated annealing algorithm is developed. A number of numerical examples of different sizes are presented to demonstrate the nature of the proposed model. In addition, some empirical studies to demonstrate the computational behaviours of the proposed solution procedure are presented.