Storage location assignment and interleaving policy are two closely related problems in warehousing management. This paper addresses the location assignment and interleaving sequencing problem at the same time in an automated storage/retrieval system with duration-of-stay based shared storage policy. A two-step procedure is developed to solve the problem. A tabu search algorithm is proposed to improve the solution. The computational results indicate that our approach is effective in finding high quality solutions, and efficient in solving large size problems.