One of the characteristic of today's manufacturing environments is volatility. Under a volatile environment (or dynamic manufacturing environment) demand is not stable. To operate efficiently under such environments facilities must be adaptive to changing demand conditions. This requires solution of the dynamic layout problem (DLP). DLP is a complex combinatorial optimisation problem for which optimal solutions can be found for small size problems. This research paper makes use of a SA algorithm to solve the DLP. Simulated annealing (SA) is a well-established stochastic neighbourhood search technique. It has a potential to solve complex combinatorial optimisation problems. The paper presents in detail how to apply SA to solve DLP and an extensive computational study. The computational study shows that SA is quite effective in solving dynamic layout problems.