In this thesis, we study the topology design problem in communication networks. It is the problem of a Virtual Private Network(VPN) provider. Given a set of customer nodes and a set of commodities, we aim to locate links between customer nodes and route the commodities over these links. The cost to be minimized is the sum of location and routing costs. The problem has capacity, degree and delay constraints. An important characteristic of the problem is that the commodities cannot be split, therefore they must be routed over single paths. We present an integer programming formulation of the problem and introduce two sets of valid inequalities. The problem has two parts: locating links and routing commodities. We first analyze the commodity routing problem and propose an efficient heurisric for it. Finally we propose a heuristic method of generating good feasible solutions to our problem. The final heuristic is a Tabu Search which uses the first heuristic proposed for routing problem as a subroutine. Our results prove to be closer to the lower bounds we generate than previously proposed heuristics.