Although there are numerous studies that address the problem of optimal machine grouping and part family classification for cellular manufacturing, little research has been reported that studies the conditions where cellular manufacturing is appropriate. This paper, in order to evaluate and compare the job shop with the GT cellular shop, the performance of those shops were simulated by using SIMAN. We tested the effect of independent variables including changes of product demands, intercell flow level, group setup time, processing time variability, variety of material handling systems, and job properties (ratio of processing time and material handling time). And also performance measures (dependent variables), such as machine utilization, mean flow time, average waiting time, and throughput rate, are discussed. Job shop model and GT cellular shop written in SIMAN simulation language were used in this study. These systems have sixteen machines which are aggregated as five machine stations using the macro feature of SIMAN. The results of this research help to better understand the effect of production factors on the performance of cellular manufacturing systems and to identify some of the necessary conditions required to make these systems perform better than traditional job shops. Therefore, this research represents one more step towards the characterization of shops which may benefit from cellular manufacturing.