||Flexible manufacturing has been treated as the main solution for challenges of high product proliferation and frequent production volumes change. However, literature and industrial experience have shown that without flexible material handling systems (MHS), flexible manufacturing cannot be implemented successfully. Therefore, the designing and planning of flexible MHS has attracted intensive research. In this study, a detailed designing and planning of a new generation of flexible MHS using free-ranging automated guided vehicle (AGV) with an indoor local positioning system (LPS) is illustrated at first. Then as a case study, we explore the potential advantages of this free-ranging MHS in the apparel industry. Through Monte Carlo simulation and analytical models, we found that the free-ranging MHS can have significant advantages over the fixed-track MHS. The critical component of the free-ranging MHS is a cost-effective, reliable and accurate navigation system and ultrasonic positioning system (UPS) is such a promising system. A fundamental design consideration of UPS is the sensor placement which is application oriented. In manufacturing application, we develop a quasi-three dimension uniform sensor placement model to compare the three common sensor placement schemes (triangle, square and hexagon) and found that the triangle deployment outperforms other schemes. In the warehouse application, a multiple objective integer nonlinear program (INLP) coupled with mixed positioning resolution is developed for three dimension directional random sensor placement problem to ensure a reliable and 'real time' UPS. A genetic algorithm is provided to tackle the optimization problem. Sensitivity analysis is also included to show the robustness of the solution. Deployment issues are also studied to enhance the performance of the free-ranging MHS.