AbstractThe facility layout problem (FLP) aims to minimize the material handling costs by determining the most efficient arrangement of facilities within a space. Among several types of layout structure, bay layout is used in a wide variety of manufacturing contexts of which the workstations are assigned to several parallel bays. Concerning the world trend in automation and advantages of flexibility and space utilization, the Automated Guided Vehicle (AGV) systems are considered in this paper to address the bay layout problems.A two-stage model called Spine Bay Layout is developed to allocate the workstations into several inter-bay systems such that not only the material handling cost can be minimized, but also the flexibility in applications can be enhanced. In order to compare with the conventional system and facilitate the flexible applications, an extended model is presented for the Single Spine Bay Layout.The results show that in comparison with the previous research, the proposed model reduces not only the total cost; but also the solution time. Moreover, due to the high complexity of the model, a sub-model called Allocation Model is proposed to provide the feasibility condition of the two-stage model.