Cellular Manufacturing (CM) is increasing in importance as a philosophy with broad applicability in domestic manufacturing companies. Lately, CM is being criticized by the academic community for its lack of superior performance relative to a functional layout (FL). Additionally, there exists a lack of consensus among researchers on the appropriate manufacturing environment for the applicability of CM. Not only that, there have been few research efforts to study the behaviour of CM systems as a function of setup time, processing time and their ratio. This ratio is found to be a critical parameter in identifying the proper manufacturing environment for the suitability of CM. This paper uses an analytical model to investigate the relative performance of a partitioned (cellular) system compared to an unpartitioned (functional) system as a function of the ratio between setup time and processing time per unit, varying over a large domain of values. The performance criteria used are flow time and work-in-process. The study provides insights into the conditions under which partitioned, unpartitioned or both systems are feasible and also when one strategy outperforms the other.