This paper develops a method for continuous-time scheduling problems in flexible manufacturing systems. The objective is to find the optimal schedule subject to different production constraints: precedence constraints (bills of materials), sequence-dependent setup times, finite machine capacities, and pressing demands. Differential equations along with mixed constraints are used to model production and setup processes in a canonical form of optimal control. The proposed approach to the search for the optimal solution is based on the maximum principle analysis and time-decomposition methodology. To develop fast near-optimal solution algorithms for sizable problems, we replace the general problem with a number of subproblems so that solving them iteratively provides tight lower and upper estimates of the optimal solution.