Non-competitive market pricing is easy to use and maintain but it is a major issue in automated guided vehicles (AGVs) that are available in the current market. Space is a very valuable commodity in urban areas. The current AGV available in the market needs optimization and is specifically designed for one particular form of storage system. In order to reduce the complexity of the system, hard locating method approach is used. Hard locating is a process that assists the operator in avoiding mistakes. In this work, an AGV for rapid inventory storage system is proposed. The AGV consists of a 5-degrees of freedom (DOF) robotic arm with a two-fingered gripper is used for picking and placing the boxes. The gripper is equipped with a piezoelectric sensor to sense the size of the object. By using this approach, the existing rack can be used without much alteration. This system has the capability to increase the utilization of the warehouse. This paper presents an optimized automated storage and retrieval system (ASRS) with the help of AGV with reduced cost and complexity. © 2021, Springer Nature Singapore Pte Ltd.