In this paper, criteria and algorithms for the optimal service rate in a closed queueing network have been established. The objective is to minimize total cost. It is shown that system throughput is increasing concave over the service rate of a node and cycle time is increasing convex over the set of service times with a single calss of cubsomers. This enables developing an algorithm using a steepest descent method when the cost function for service rate is convex. The efficiency of the algorithm rests on the fact that the steepest descent direction is readily obtained at each iteration from the MVA algorithm. Several numerical examples are presented. The major application of this research is optimization of facility capacity in a manufacturing system.