In this paper we develop an optimal and a heuristic algorithm for the probl
em of designing a flexible assembly line when several equipment alternative
s are available. The design problem addresses the questions of selecting th
e equipment and assigning tasks to workstations, when precedence constraint
s exist among tasks. The objective is to minimize total equipment costs, gi
ven a pre-determined cycle time (derived from the required production rate)
. We develop an exact branch and bound algorithm which is capable of solvin
g practical problems of moderate size. The algorithm's efficiency is enhanc
ed due to the development of good lower bounds, as well as the use of some
dominance rules to reduce the size of the branch and bound tree. We also su
ggest the use of a branch-and-bound-based heuristic procedure for large pro
blems, and analyze the design and performance of this heuristic.