A two stage model for joint optimization of production volume and communication system cost for a multi-product manufacturing system has been developed. Stage I minimizes penalty cost, which includes costs due to under-achievement of production targets and over-fulfilment of production capacities, and determines the optimal production volumes in order to achieve the desired production plan with the available physical capacities at various stations. Stage II determines optimal design parameters for communication systems while minimizing the total penalty cost and achieving the near-optimal production volumes of stage I. A case example is discussed thereafter which illustrates the importance of joint optimization of resources as against independent optimization.