Flow control is performed at the Transport layer of the OSI model. When packets are received by the destination computer, they are put into buffer while being processed. If buffer becomes full, any additional data packets will be discarded. Windowing is the mechanism used for the flow control. Window is the number of data segments a source machine can send before it must receive an acknowledgement from the destination machine.
Network administrator can increase or decrease the size of the window.
On reliable LAN the size of the window should be increased. This will decrease the number of acknowledgements, freeing up some bandwidth and increasing the speed of the transmission. If the sending machine does not receive the acknowledgement, the packets are retransmitted.