The problem is to design machine modules, such as working positions, turrets and spindle heads, suitable for the given production process. This problem is formulated as a combinatorial optimization problem where a known set of machining operations is partitioned into subsets which are assigned to the pieces of equipment under precedence, in- clusion, exclusion constraints among operations as well as productivity and location constraints. The objective is to minimize the total equip- ment cost. The solution method is based on searching the shortest path in a specific graph.