The existing methodologies to independently optimise facilities layout design and material handling system (MHS) are mainly based on minimising the material handling cost and acquisition cost and have neglected several critical variations inherent in a manufacturing system. This is despite the fact that the inherent variability causes an accumulation of work-in-process (WIP) at the various stages of production which eventually affects competing strategies of a manufacturing enterprise such as time, cost and quality. Therefore, an integrated methodology that incorporates the manufacturing variability and concurrently optimises the layout design and MHS is discussed in this paper. Queuing model is utilised to model the manufacturing system variations and genetic algorithm has been implemented to solve the integrated optimisation problem. It is also demonstrated that the proposed integrated optimisation approach can significantly improve a production system with respect to total travelling time, total WIP in the system, utilisation and quantity of material handling equipment and required area.