PurposeIn the complex environment of manufacturing system, it is proper to design a production system which meets the market requirements in the most economical and competitive manner. Flexible manufacturing system (FMS) is one of the options to meet the uncertainty in demand and high variety of products. This paper aims to review the definition, classification, and measurement of manufacturing flexibility concerned with manufacturing flexibility management.Design/methodology/approachThe selection process consists of the synthesis and critical evaluation of the concepts put forward in the extant literature. As a consequence of this process, three primary flexibility dimensions are identified: volume, variety and machine. Simulation approach is used to study the behavior of FMS under different demand scenarios and levels of flexibility.FindingsFour hypotheses are tested in five different flexibility levels. The following conclusions are obtained from the study. For any flexibility level, as the traffic density (TD) increases, the system utilization increases; as the TD increases, the throughput time increases; and as the number of part type increase, the system utilization decreases. A comparison between five flexibility levels showed that flexibility level 4 is best in terms of system utilization and throughput time. Flexibility level 2 perform second best, better than flexibility level 3 and flexibility level 5 which is not in line with initial assumption. Lastly, from the above results it is concluded that partial flexibility is better as compare to no flexibility and total flexibility.Originality/valueIt is felt that the contribution of the paper lies in demonstrating the usefulness of simulation technique in quantifying the aspects related to FMS. The effect that a specific design variable has on a specific system level flexibility type can change with the level of part processing flexibility present and flexibility trade‐off in manufacturing systems is not inevitable. This would help the planners of FMS to think and design FMS in a holistic manner.