A solution procedure to minimize the number of storage carousels has been developed under the carousel throughput rate and total storage capacity requirements. The number of carousels can be reduced by increasing the throughput rate of carousels which depends upon the size of carousels, the storage item allocation to carousels, and the item position assignments in each carousel. Since the problem is very complicated and hard to solve optimally, the following solution procedure to solve the problem hierarchically is proposed: With a given number of carousels, the storage items are allocated to carousels so that the slowest average transaction time among carousels may be minimized, and then the position of each item is assigned in the allocated carousel so that the throughput of the carousel can be maximized.