A SIMAN based simulation model is presented to determine the number of Automated Guided Vehicles(AGVs) needed to meet the material handling requirements. Estimation of the required number of vehicles is based on the sum of the idle time of vehicles and machines and the waiting time of parts. While an increase in the number of vehicles reduces the waiting time of the parts and the idle time of machines, it increases the idle time of vehicles. The application of the model is illustrated using a hypothetical manufacturing cell.