Cloud computing has emerged as a buzzword of IT-enabled business services. It makes business sense to choose an optimal location for setting up the cloud service facilities such as data centres. The distribution of services between data centre facilities and clients of a cloud can be devised mathematically as the well-known facility location problem (FLP). The decisions of location of data centres are a vital element in strategic planning for a wide range of cloud service providers. In this paper, we have applied facility location techniques in operations management for evaluating the available potential locations and zero down to the best optimal facility location, which can be used to minimise the cost associated with setting up of data centre facilities. A case study is also presented applying FLP in Indian cloud computing scenario. By using these techniques, one can ensure desired QoS and optimum use of data centre facilities. Copyright © 2013 Inderscience Enterprises Ltd.