An important limitation of the fixed charge location model is the assumption that full truckload quantities are shipped from a distribution center to a customer. The different location decision is made from the different cost of delivery. A particular three-layer steel product distribution network is investigated, in which two echelons of facilities are located. To make the location decision, the delivery cost of a multiple-stop route is calculated. A Lagrangian relaxation-based branch and bound algorithm is used to solve this location-routing problem. The numerical results for various size test problems are presented, and the results show the effectiveness of the method.