In production environments, such as Flexible Manufacturing Systems (FMSs), the schedule can be disturbed by the occurrence of unplanned events. Machines stop for major failures, maintenance, tool changes due to wear, or tool reassignments. The rescheduling process, however, can be costly. In this study, a dynamic measure of flexibility which helps to determine an appropriate time for rescheduling an FMS has been defined and investigated. Flexibility is defined as a function of Capability and Capacity. Accordingly, two metrics have been developed to monitor the capability and capacity efficiency of each machine in the system for responding to the dynamic system status. The value of each metric falls between 0 and 1 at all times. Higher values in the capability metric mean better machine selection and part distribution strategies among the machines. Higher values for the capacity metric mean higher machine utilization in the production plan. Based on the interaction between the metrics and their respective behavior in the system, four states have been identified and characterized. Simulations of various scenarios can be used to demonstrate the use of these metrics for monitoring FMS operations and determining appropriate times for rescheduling and tool reassignment.