In feeder automation transformation there are difficulties in equipment and location selection. To help with this, an optimal layout model of feeder automation equipment oriented to the type of fault detection and local action is proposed. It analyzes the coordination relationship of the three most common types of automation equipment, i.e., fault indicator, over-current trip switch and non-voltage trip switch in the fault handling process, and the explicit expressions of power outage time caused by a fault on different layouts of the above three types of equipment are given. Given constraints of power supply reliability and the goal of minimizing the sum of equipment-related capital investment and power interruption cost, a mixed-integer quadratic programming model for optimal layout is established, in which the functional failure probability of equipment is linearized using the 3δ principle in statistics. Finally, the basic characteristics of the proposed model are illustrated by different scenarios on the IEEE RBTS-BUS6 system. It can not only take into account fault location and fault isolation to enhance user power consumption perception, but also can guide precise investment to improve the operational quality and efficiency of a power company.