Although the technology exists for more advanced applications of automated guided vehicles in flexible manufacturing systems, the current employment of these vehicles in material handling generally subscribes to a simple mode of operation : single-load-carrying capacity for each vehicle and unidirectional traffic on each route of the system. Through a simulation programme, this study investigates the effect of several key factors related to the automated guided vehicles on the overall performance of a flexible manufacturing system. These are the number of pallets allowed in the system, the number of vehicles used and the carrying capacity of each and the input and output queue capacities of the machining stations; finally bidirectional traffic is allowed in some routes. The results show that there is a strong interaction among these factors and reveal their combined effects on the throughput from a small flexible manufacturing system. Upon the user's request, the simulation program also provides the animated colour graphics of the system to view developments concurrently under the selected decision values through time.