The authors discuss the performance evaluation of a closed transfer line with a limited number of pallets. They consider a system consisting of machines separated by buffers of limited capacity. Each machine has a constant processing time and is prone to failures. A continuous flow model is used to describe the behavior of such a system. This model is analyzed by a decomposition method which is an extension of a method developed for open transfer lines. The constraint of the population is taken into account by imposing the condition that the sum of the average queue lengths is equal to the number of pallets of the closed line. Numerical examples show the accuracy of the method.>