In view of the high investment and tooling cost of a CNC machining centre, the cutting and idle times should be optimised by considering the tool consumption and the non-machining time cost components. In this paper, we propose a detailed mathematical model for the operation of a CNC machine tool which includes the system characterisation, the cutting conditions and tool life relationship, and related constraints. This new module will be a part of an overall computer-aided process planning system to improve the system effectiveness and to provide consistent process plans. A hierarchical approach is presented for finding tool-operation assignments, machining conditions, appropriate tool magazine organisation and an operations sequence which results in the minimum production cost. © 1996 Springer-Verlag London Limited.