Facility layout problems have been generally solved either hierarchically or integrated into other phases of plant design. In this paper, a hybrid method is introduced so that clustering and facilities layout can be simultaneously optimized. Each cluster is formed by a group of connected facilities and selection of the most appropriate cluster configuration is aimed. Since exact method by MIP is limited to small problems, a heuristic algorithm including constructive and improving phases is developed. In order to enhance the performance of the algorithm, systematic generation of intersection points inside available area together with shaking, split groups and Tabu list techniques are used.Then, two different examples are presented and the comparison of the results supports the merit of the proposed algorithm. For further validation, 18 test problems are solved both by the proposed algorithm and MIP by CPLEX. Comparison of the results reveals that for up to 13 facilities, the best solutions of the algorithm are equal to optimum solution of MIP but achieved in shorter times. For larger problems with higher number of facilities, even though processing times for MIP is much longer, in almost all cases, it cannot produce the best solutions of the proposed algorithm.

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