This thesis deals with a heterarchical manufacturing system which consists of the autonomous objects such as automated guided vehicles (AGVs) and machine centers (M/Cs). It is known that dispatching rule of AGVs is closely related to the system efficiency. In this study, a new AGV dispatching algorithm is proposed utilizing the bidding concept. To determine an appropriate bidding price, the algorithm utilizes the relevant information such as the level of work-in-process (WIP) at the incoming buffer and outgoing buffer of M/C, elapsed blocking and shortage time of M/C, required travel distance from AGV to M/C. In M/C dominated situation, M/C chooses an AGV which comes up with the highest bidding price for the part it holds at its outgoing buffer. The bidding price from AGV is determined based on the purchase price of part at the corresponding destination M/C and vehicle``s operating cost. In AGV dominated situation, AGV selects a pair of M/C based on profit comparing the bidding price of source M/C and purchase price of the corresponding destintion M/C. Using simulation studies, the proposed dispatching algorithm is compared with several well-known dispatching rules in a hypothetical job shop environment in terms of the system throughput. The experiments are carried out varying the number of buffers and AGVs. The results show that the algorithm gives better performances compared to the others.