This paper discusses a real time production control system of a FMS (Flexible Manufacturing System). The control is organized in a hierarchical structure according to the various decisions at the different time scales. In the earlier work-set-up time was not considered. Because the capacity of the toll magazine is limited, this assumption may not be adequate for selecting times to change configurations so that new part family can be produced. The goal of the control system is to meet production requirements while the machines fail and are repaired at random times. In this thesis the machien failure and set-up are considered simultaneously. Here the hedging point of this system is calculated, and the formulation of the dynamic control for FMS that has unreliable machines with set-up suggested.