We investigate a new model for partitioning a set of items into groups (clusters). The number of groups is given and the distances between items are well defined. These distances may include weights. The sum of the distances between all members of the same group is calculated for each group, and the objective is to find the partition of the set of items that minimizes the sum of these individual sums. Two problems are formulated and solved. In the first problem the number of items in each group are given. For example, all groups must have the same number of items. In the second problem there is no restriction on the number of items in each group.We propose an optimal algorithm for each of the two problems as well as a heuristic algorithm. Problems with up to 100 items and 50 groups are tested. In the majority of instances the optimal solution was found using IBM's CPLEX. The heuristic approach, which is very fast, found all confirmed optimal solutions and equal or better solutions when CPLEX was stopped after five hours. The problem with given group sizes can also be formulated and solved as a quadratic assignment problem.