Cellular manufacturing requires formation of machine cells that can produce families of parts with similar processing requirement. The purpose of cell formation is to create separable machine clusters and part families simultaneously. However, the cell formation process often includes the identification of exceptional elements. This paper presents cell formation method under consideration of alternative routings in FMS which consists of machines capable of multi-processing and parts which require more than one operation. We suggest theorems to calculate the maximum number of machine cell and part family which have no exceptional elements. We also develop a cell formation algorithm which is based on the suggested theorem. A numerical example is provided to illustrate the proposed theorem and algorithm.