To identify the desired transmission range of each node in a cluster and power management based on mean transmission power within the context of wireless ad-hoc networks. By reducing the transmission range of the nodes, energy consumed by each nodes is decreased and topology is formed by sending messages between the nodes such as RTS and CTS. A new algorithm is formulated by deriving a mathematical expression based on these messages. It helps in reducing the system power consumption and prolonging the battery life of mobile nodes. Formation of cluster and selection of optimal cluster head and thus forming the optimal cluster taking weighted metrics like battery life, distance, position and mobility is done based on the factors such as node density, coverage area, contention index, required and current node degree of the nodes in the clusters.