This paper generalizes the classic two-stage multicommodity distribution system design problem to the one that includes plant locations as well as distribution center locations. Accommodating plant location leads to subproblems which are mixed are mixed integer. Hence. no LP-type subproblems are avail-able, and therefore standard Benders decomposition no longer applies. We develop new solution method which combines an integer L-shaped method with Benders decomposition to suit the purpose, and pre-sent the test results.