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We consider a flexible manufacturing cell with two workstations, a single material handling device, and a storage space. Two layouts are considered for the storage space; in one layout the two workstations are sharing a common storage space, whereas, in the other one each workstation has its own local storage. For each layout, we develop a queueing network model. These models explicitly consider the material handling system delay times. In these models, it is also assumed that a workstation could be blocked due to the material handling device. Furthermore, in the local storage layout, a workstation could also be blocked due to the other workstation. Using these models we compare the two layouts and study the effects of mean and variance of the material handling system delay times on workstation utilization. We also discuss some issues related to the design of these cells.