The optimal design of automatic transfer lines is considered. To this end, operations are partitioned into blocks. The operations of the same block are performed simultaneously, and different blocks of the same workstation are activated sequentially. Constraints related to the design of blocks and workstations, as well as precedence constraints related to operations, are given. The problem consists in minimizing the total number of workstations and blocks, while reaching a given cycle time and satisfying the above constraints. We develop an exact method which proceeds by setting the problem as a constrained shortest path problem. This method is efficient for small and medium size problems.