This paper considers the problem of minimizing the fixed cost of acquiring material handling transporters and the operational cost of material transfer in a manufacturing system. This decision problem, which arises during manufacturing facility design, is modeled using an integer programming formulation. Since the problem is NP-complete, two efficient heuristics are developed to solve it. Computational complexity, worst-case performance analysis, and extensive computational tests are provided for both heuristics. The results indicate that the proposed methods are well suited for large-scale manufacturing applications.