In Mobile Ad Hoc Networks (MANETs) nodes are allowed to move freely which causes instability in the network. To handle this, the nodes are grouped into clusters which make the topology of the network appear more stable. In proposed algorithms, the size of these clusters has been either ignored or handled insufficiently. This Thesis proposes a penalty-based approach to handle cluster sizing in a more appropriate manner. A configurable penalty function is defined which assigns penalties to each of the possible cluster sizes. The penalty is then used in conjunction with a merge qualifier to determine if a merge is allowed. Merges will be allowed if the total penalty of the two clusters decreases as a result of the merge. Additionally a split merge process has been developed to allow a number of nodes to split from a cluster and merge with a new cluster. A separate split merge qualifier is used to determine if a split merge will be allowed to happen; it will as long as the total penalty of the two clusters after the split merge is less than the total penalty before the split merge. Simulations and thorough analysis of the results show that the proposed changes are on par with the base algorithm used; however, the penalty function allows for a more complex clustering sizing strategy
