This thesis describes the development and implementation of an Interleaving Warehouse Layout Model. Traditionally, the space allocated to items in a warehouse is determined on the basis of inventory cost considerations. With space requirements taken as given, the actual assignment of items to locations in the warehouse is carried out independently. Assuming an interleaving ("dual command") order picking method and the simple economic order quantity inventory model, it is demonstrated that the quantity and location problems must be considered simultaneously in order to achieve a minimum total cost (order picking cost plus inventory cost). A heuristic optimization technique is developed and applied to a set of realistic, hypothetical problems. This model allows warehouse management to assess the tradeoffs in handling costs among various stock arrangements and reorder quantities to achieve a minimum total cost. / Master of Science