The paper presents a conceptual solution and a prototypal intelligent nesting system for optimal cutting. The problem of nesting can generally be divided into two intellectual phases: Recognition and classification of shapes, and arrangement of recognized shapes on a given surface. In solving these problems, methods of artificial intelligence are applied. | Yugoslav Journal of Operations Research 13 (2003), Number 2, 229-243 INTELLIGENT NESTING SYSTEM Zoran DJURI[I] Montenegro Airlines Podgorica Podgorica, Serbia and Montenegro Miodrag MANI] Faculty of Mechanical Engineering University of Ni{, Ni{, Serbia and Montenegro mmanic@ Abstract: The economy of the process for the manufacture of parts from sheet metal plates depends on successful solution of the process of cutting various parts from sheet metal plates. Essentially, the problem is to arrange contours within a defined space so that they take up minimal surface. When taken in this way, the considered problem assumes a more general nature; it refers to the utilization of a flat surface, and it can represent a general principle of arranging 2D contours on a certain surface. The paper presents a conceptual solution and a prototypal intelligent nesting system for optimal cutting. The problem of nesting can generally be divided into two intellectual phases: recognition and classification of shapes, and arrangement of recognized shapes on a given surface. In solving these problems, methods of artificial intelligence are applied. In the paper, trained neural network is used for recognition of shapes; on the basis of raster record of a part's drawing, it recognizes the part's shape and which class it belongs to. By means of the expert system, based on rules defined on the basis of acquisition of knowledge from manufacturing sections, as well as on the basis of certain mathematical algorithms, parts are arranged on the arrangement surface. Both systems can also work independently, having been built on the modular principle. The system uses various product models as elements of integration for the entire system. Keywords: Nesting, neural network, expert system, product model. 1. INTRODUCTION A large number of machine parts built into various products are manufactured from sheet metal by means of cutting, or a cut out part from a sheet metal plate is .