To develop a cellular manufacturing and incentive plan for manufacturing cutting die for a case study. The case is the operation of cutting die department in a machinery made to order manufacturing in Thailand. Cutting die is a batch manufacturing, usually ordered in reasonable time and qualities approximately 100-500 pieces per lot. The tradition production have a problem with work in process, long production time, high overtime and employees can do only one task. Cellular munufacturing used group technology and part families techique to improve productivity. Output per raw material improved from 3.02 to 3.24 and output perlabor from 7.62 to 9.22, which is 7.28% and 20.99% respectively. Cellular manufacturing can reduce lead time to work and the employees have the various skill. But overtime payment was still high. Incentive plan was then used to improve productivity after implement cellular manufacturing. Incentive plan was setted according to exact daily output target and the employees can go home immediately when they finish the job. By incentive plan, output per raw material increased from 3.24 to 3.95 and output per labor increased from 9.22 to 9.71, which is 21.90% and 5.31% respectively. Overtime payment is more efficiently controlled, the employees satisfied with their income and they can go home before 8 hours.