This paper deals with a man-on-board automated storage/retrieval system where each customer order consists of a number of different items and is picked one at a time. For the system the problem examined is to allocate storage locations dedicatedly to items so that the total travel time required to pick all the given orders per period is minimized. The problem is shown to be formulated as a variant of the generalized assignment model. A heuristic for the storage layout problem is developed based on the group technology concept considering both order structure and frequency. Through the heuristic, close relationships between items are identified from the order structure, and then based on the relationships the items are compelled to be stored closely in the storage rack following a space-filling curve. Experimental results are provided to describe the performance of the heuristic