High amount of flexibility and quick response times have become essential features of modern manufacturing systems where customers are demanding a variety of products with reduced product life cycles. Flexible manufacturing system (FMS) is the right choice to achieve these challenging tasks. The performance of FMS is dependent on the selection of scheduling policy of the manufacturing system. In Traditional scheduling problems machines are as considered alone. But material handling equipment’s are also valuable resources in FMS. The scheduling of AGVs is needed to be optimized and harmonized with machine operations. Scheduling in FMS is a well-known NP-hard problem due to considerations of material handling and machine scheduling. Many researchers addressed machine and AGVs individually. In this work an attempt is made to schedule both the machines and AGVs simultaneously. For solving these problems- a new metaheuristic Simulated Annealing (SA) algorithm is proposed.