In this paper, we discuss recent innovations in manufacturing technology and their implications on the design and control of manufacturing systems. Recognizing the need to respond properly to rapidly changing market demands, we discuss several types of flexibility that can be incorporated in our production organisation to achieve this goal. We show how the concept of a Flexible Manufacturing System (FMS) naturally arises as an attempt to combine the advantages of traditional Job Shops and dedicated production lines. The main body of the paper is devoted to a classification of FMS problem areas and a review of models developed to understand and solve these problems. For each problem area, a number of important contributions in the literature...