To satisfy the stringent requirement of capacity enhancement in wireless networks, cooperative relaying is envisioned as one of the most effective solutions. In this paper, we focus on the problem of capacity enhancement by way of relay stations (RSs) placement, which is a critical task of network planning and deployment to achieve an efficient and scalable network design. To fully exploit the performance benefits of cooperative relaying, we develop an optimization framework to maximize the capacity as well as meet the minimal traffic demand for each subscriber station (SS). The problem of joint RS placement and bandwidth allocation is formulated into a mixed integer nonlinear program and solved through a heuristic approach based on genetic algorithm (GA). Moreover, an upper bound on the capacity is derived to assist the estimation of system performance given a network configuration. Numerical results are presented to demonstrate the effectiveness of the solution approach and the performance benefits due to RS placement and optimal bandwidth allocation through cooperative relaying.