Flow shop scheduling optimization is one important topic of applying artificial intelligence to modern bus manufacture. The scheduling method is essential for the production efficiency and thus the economic profit. In this paper, we investigate the scheduling problems in a flexible flow shop with setup times. Particularly, the practical constraints of the multi-queue limited buffer are considered in the proposed model. To solve the complex optimization problem, we propose an improved compact genetic algorithm (ICGA) with local dispatching rules. The global optimization adopts the ICGA, and the capability of the algorithm evaluation is improved by mapping the probability model of the compact genetic algorithm to a new one through the probability density function of the Gaussian distribution. In addition, multiple heuristic rules are used to guide the assignment process. Specifically, the rules include max queue buffer capacity remaining (MQBCR) and shortest setup time (SST), which can improve the local dispatching process for the multi-queue limited buffer. We evaluate our method through the real data from a bus manufacture production line. The results show that the proposed ICGA with local dispatching rules and is very efficient and outperforms other existing methods.