AGVS(Automated Guided Vehicle Systems) in material handling have been used widely since late 1970s. Implementation of an AGVS generally requires substantial study to optimize the design and performance of guide-paths. Traditional mathematical approaches have been used with limited success to analyze AGVS. These approaches, however, do not provide a practical tool for guide-path designers. This paper presents a new approach based on rules in designing and assessing AGV guide-paths to improve the design of a closed-loop layout. A framework for the integrated approach is proposed, problem solving procedures are explained, and a case study is reported to demonstrate the framework. Deletion of seldom used guide-paths, and addition of bypasses to solve the congestion problem, are conducted interactively and iteratively through simulation experiments. To visualize the results, a graphic control program is developed and integrated with the AutoMod/AutoGram simulation package.