Flexible systems are known of enabling organizations to take advantage of diversified products, low volume production items with short life-cycles. They also improve the ability to respond to market changes. Flexibility has thus become a strategic manufacturing need in recent years.

Because of the high initial capital outlay involved, the selection of the appropriate flexible solution has become a critical issue. This thesis proposes a methodology to determine the most cost effective and feasible flexibility strategy. A flexibility audit is developed to analyze and evaluate the changes taking place in a facility's environment. These changes and a measurement scheme is then used to compute the needed measure of four types of flexibilities. The audit provides the percentage gap between the actual and needed measures which is used to select the appropriate strategy.

Finally, factors like payback, opportunity cost, organizational readiness and top management support are considered to determine the most cost effective strategy. As a part of this thesis, the audit has been automated using Visual Basic 4 software.