Video on demand (VoD) is a technology used to provide a number of programs to a number of users on request. In developing a VoD system, a fundamental problem is load balancing, which is further characterized by optimally placing videos to a number of predefined servers and routing the user program requests to available resources. In this paper, an exact solution algorithm is described to solve the video placement and routing problem. The algorithm is based on Lagrangean relaxation and decomposition. The novelty of the approach can be described as the use of integer programs to obtain feasible solutions in the algorithm. Computational experimentation reveals that for randomly generated problems with up to 100 nodes and 250 videos, the use of such integer programs help greatly in obtaining good quality solutions (typically within 5% of the optimal solution), even in the very early iterations of the algorithm.