This paper proposes a methodology based on installation cost for locating the optimal position of interline power flow controller (IPFC) in a power system network. Here both conventional and non conventional optimization tools such as LR and ABC are applied. This methodology is formulated mathematically based on installation cost of the FACTS device and active power generation cost. The capability of IPFC to control the real and reactive power simultaneously in multiple transmission lines is exploited here. Apart from locating the optimal position of IPFC, this algorithm is used to find the optimal dispatch of the generating units and the optimal value of IPFC parameters. IPFC is modeled using Power Injection (PI) model and incorporated into the problem formulation. This proposed method is compared with that of conventional LR method by validating on standard test systems like 5-bus, IEEE 30-bus and IEEE 118-bus systems. A detailed discussion on power flow and voltage profile improvement is carried out which reveals that incorporating IPFC into power system network in its optimal location significantly enhance the load margin as well as the reliability of the system.