Many firms are considering Flexible Manufacturing Systems as a means for increasing productivity, quality and profitability . In t his paper a methodology for properly comparing and evaluating FMS' s is presented. The appropriate financial criteria are presented. Mathematical m ode ls of different FMS's are presented. The important stochastic variables are determined. The principles of stochastic dominance, risk preference and the value of information; and a decision analysis cy cle are used to evaluate the FMS's.