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Contrasts functional layouts and cellular layouts with regard to the effects of set‐up time reduction and lot size on flow time and through‐put. The structural environment for the functional analysis is an efficient functional system with a staged sequence of four machine centers with unidirectional flow and no backtracking. The structural environment for the cellular analysis is a partitioned cell consisting of one machine from each of the four machine types with unidirectional flow and no backtracking. Simulation models produce robust results for eight lot size levels and one (functional model) and seven (cellular model) set‐up time reduction levels. The results contrast the effectiveness of the two manufacturing approaches under differing input conditions. Shows that the choice between the functional structure and the cellular structure significantly affects through‐put at lot sizes up to 55, while for lot sizes of 60 and above there is no significant effect. The study also confirms previous results regarding the effect of manufacturing structure choice on flow time.

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