To satisfy customer's demands in today's market, industry and academe have invested considerable effort to make production systems more efficient and competitive. The production systems that have been implemented and identified in industry have their own unique advantages under certain conditions. In practice, once a production system is adopted in a shop, the operation mode of the shop will remain the same over time. However, in a changing product mix environment, what a shop really needs is an adaptable production system to gain the best performance that is possible for the shop;The objective of this study is to develop a systematic procedure to construct a virtual production system that allows an existing shop to switch its operation from one mode to another without physical reconfiguration of the shop. The machines and the material handling system of the shop are logically reorganized into various patterns to obtain different versions of virtual production systems. Actually, a virtual production system exists as a set of information in a computer database. A reconfiguration of the data in the database leads to a corresponding logical reorganization of the physical system. Hence, on one hand, while the layout of a shop still remains the same, on the other hand, the operation mode of the shop is logically changeable over time;In this thesis, the performance of virtual production systems and other forms of production systems are examined and compared to one another using three different measures. The results obtained show that virtual production systems are superior to traditional production systems and are competitive with production systems that allow for the physical rearrangement of the machines as the product mix changes. However, when one considers the cost that can be incurred to physically reconfigure a shop and the fact that movable machines are not usually employed in most industries, virtual production system provides a feasible and reasonable solution to improve a shop's performance in a dynamic changing product mix environment.