The modeling and control of a flexible transfer line is considered in this paper. The transfer line is able to produce a number of various products concurrently: it involves considerable set-up times between different product groups and has limited interprocess buffer capacity. The proposed control methodology is hierarchical in nature. At upper levels production orders are aggregated in groups with the aim of reducing system set-up times while satisfying demand. At lower levels, given a set -up configuration, dispatching' of parts into the system is performed based on the concept of periodic loading. Simulation results have shown that when the system is controlled by the suggested scheme, the work-in-progress level is reduced by 50% and part waiting time by 93% as compared to the current system control practices. It was found that doubling the capacity of two critical workstations may result in a 70% increase in productivity.