The paper presents a model for assessing cost effectiveness of facility layout alternatives. The model is a five-phase procedure including evaluating current layout in phase 1. In phase 2, feasible layout alternatives are generated. Phase 3 and phase 4 provide evaluation based on tangible and intangible factors. Phase 5 prefers a layout alternative based on multiple criteria decision making tools. Economical and working environmental aspects are considered in the evaluation process utilizing tools such as Life Cycle Cost Analyses (LCCA) and Multi Criteria Decision Making (MCDM). Factors reflecting life-cycle consideration include development, investment, usage, and scrapping. Non-economic evaluation elements are also considered in the MCDM. To test the proposed model, a case study is performed at the Swedish Mail Terminal in the town of Alvesta, a part of Posten Sweden AB. The terminal has several space, machine, and operational constraints. The three layout alternatives investigated are suggested by the authors, by the branch management, and by the Posten Sweden AB management personal. Result obtained from the study show that the layout alternative with the most implementation cost yields a nine percent better total LCC than the closest alternative based on ten years life cycle length. The paper provides a generalized layout evaluation procedure for manufacturing companies. Further research is required to customize the proposed procedure for evaluating alternative service facilities.