creating a shapefile based on clusters of points

Discussion created by jtcmpd on Feb 7, 2011
Sorry if I've posted this in the wrong area, but I think my question is about this category.

I have a map with numerous points within a city's boundaries along with a streets shapefile.  Some of the points are clustered in different areas of the city.  The points mapped changed every Monday.  Is there a way to have arc generate a polygon shapefile around the areas that have the highest clusters of points.  I need to be able to limit the max size of the polygon to about 2 square miles.  I've tried searching the forum but I can't find what I'm looking for.