A mathematical model for a volume flexible manufacturing system is developed in a family production context, assuming that there exists a dedicated production facility as well as a separate management unit for each of the items. The possibility of machine breakdowns resulting in idle times of the respective management units is taken into account. The production rates are treated as decision variables. It is also assumed that there is a limitation on the capital available for total production. An optimal production policy is derived with maximization of profit as the criterion of optimality. The results are illustrated with a numerical example. Sensitivity of the optimal solution to changes in the values of some key parameters is also studied.