The purpose of this research was to investigate the site planning issues ( including location, number of sites ) of the distribution system. Previous researches have focused on the relationship between distribution center- retail store or plant-distribution center ( ie., 2 levels ), while this research expanded to the problem of plant- distribution center-retail store ( ie., 3 levels ). An efficient branch-and-bound heuristic was developed to solve the transportation network of the distribution system. The results suggest that this heuristic can provide an acceptable solution.