The purpose of this study is to develop an effective design of Cellular Manufacturing System (CMS) in dynamic production requirement with multiple objectives. Simulated annealing (SA) method is proposed optimization. The method is discussed and the model is implemented successfully in a manufacturing company with two period planning horizons. The algorithm developed in this study reduces intercell movement cost and intracell movement cost. An algorithm of CMS design minimizes total CMS cost and works in real life situation.