The problem of plant layout has generally been treated as a static one. In this paper, we deal with the dynamic nature of this problem. Both optimal and heuristic procedures are developed for this problem and are based on a dynamic programming formulation. The use of one of these approaches depends on the ability to solve the static problem efficiently. Finally, we briefly discuss the issue of extending the planning horizon, and how to resolve system nervousness when previously planned layouts need to be changed.facilities/equipment planning: layout, dynamic programming: applications, networks/graphs