Designing a cellular manufacturing system involves four major decisions: cell formation, cellular layout, operator assignment and cellular scheduling which should be considered, simultaneously. This article presents a new mathematical model to solve the cell formation, operator assignment and inter-cell layout problems, concurrently. The objectives of proposed model are minimization of inter–intra cell part movements, machine relocation cost and operator-related issues including hiring, firing, training and salary costs. Two numerical examples in both small and large sizes are optimally solved by the Lingo software to verify and validate the proposed mathematical model. Also, a sensitivity analysis is performed to analyze the behavior of operators in different production periods.