Cellular manufacturing(CM) is a philosophy and innovation to improve manufacturing productivity and flexibility. Cell formation(CF), the first and key problem faced in designing an effective CM system, is a process whereby parts with similar design features or Processing requirements are grouped into part families, and the corresponding machines into machine cells. Cell formation solutions often contain exceptional elements(EEs). EE create interactions between two manufacturing cells. A policy dealing with EEs considers minimizing the total costs of three important costs; (1)intercellular transfer (2)machine duplication and (3)subcontracting. This paper presents an effective cell formation method with fuzzy nonlinear mixed-integer programming simultaneously to form manufacturing cells and to minimize the total costs of eliminating exceptional elements.