Location area (LA) planning plays an important role in cellular networks because of the tradeoff caused by paging and registration signalling. The upper boundary for the size of an LA is the service area of a mobile services switching center (MSC). In that extreme case, the cost of paging is at its maximum but no registration is needed. On the other hand, if each cell is an LA, the paging cost is minimal but the cost of registration is the largest. Between these extremes lie one or more partitions of the MSC service area that minimize the total cost of paging and registration. In this paper, we seek to determine the location areas in an optimum fashion. Cell to switch assignments are also determined to achieve the minimization of the network cost. For that purpose, we use the available network information to formulate a realistic optimization problem, and propose an algorithm based on simulated annealing (SA) for its solution. Then, we investigate the quality of the SA-based technique by comparing it to greedy search, random generation methods, and a heuristic algorithm.