This paper is concerned with a branched pipe network system which transports some fluids or gas from multiple sources to multiple demand nodes. A nonlinear programming model is proposed for determining junction locations simultaneously with selection of pipe sizes and pump capacities such that the capital and operating costs of the system are minimized over a given planning horizon. To solve the model, a hierarchical decomposition method is developed with the junction location being the primary variable. With some values fixed for the primary, the other decision variables are found by linear programming. Then, using the postoptimality analysis of LP, junction locations are adjusted. We repeat this process until an optimum is approached. A simple example of designing a water distribution network is solved to illustrate the optimization procedure developed.