In all manufacturing and service industries the layout of facilities is an important determinant of operating efficiency and costs. Whenever the flow of materials or people is complex, computerized procedures offer the only feasible means of developing and evaluating alternative arrangements. This paper describes an interactive approach to construction and improvement procedures which utilizes a refresh graphics terminal (IMLAC)linked to a PRIME 400 computer. Input includes projected materials flow, estimates of material handling costs, 2-D templates of machines, etc., and an initial layout which can be either existing, proposed, or constructed using the procedure INLAYT. A heuristic procedure, S-ZAKY, utilizes multi-pairwise facility exchange to develop improved layouts based upon an analysis of materials flow. The improved layout is displayed in detail alongside the initial layout at the graphics terminal together with relevant material handling costs. The user may then accept, reject or modify the improved layout using the light-pen attached to the terminal before proceeding to successive iterations until satisfied. An economic evaluation of the projected savings in material handling costs against costs of relayout may be displayed at each iteration. On completion, a fully documented record including drawings may be obtained for every stage in the. procedure.