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Building insulation can be effective in energy conservation by reducing heating and cooling loads in an air‐conditioned building. Following the method given by Kumar et al. (1989), optimum thicknesses of insulation for the components of a one‐room building are determined. It is shown that the optimum thicknesses of insulation for building components are less if the inside air temperature requirement is less stringent. The optimum distribution of insulation over the building components is also determined. When the amount of insulation available is less than the optimum volume of insulation for the building.