The Shape Penalty is the factor by which the excess of the department's shape ratio over the maximum shape ratio gets multiplied if it exceeds the maximum shape ratio and this product gets added to the distance score to yield the shape adjusted distance score. The purpose of the shape penalty is to avoid long and narrow departments. A higher shape penalty will tend to make departments more like squares. A low or a shape penalty equal to zero will allow more long and narrow departments. The shape penalty cannot be negative. The penalty of exceeding the maximum shape ratio depends on the department function, so different departments can have different shape penalties.
Only the block exchange algorithms use the shape penalty to penalize block layouts to avoid excessively narrowly shaped departments. The Shape Penalty is an input parameter set by the user. You can use the Department command from the Edit menu to set the maximum shape ratio of individual departments. You can use the Shape Penalty command of the Edit menu to set the maximum shape ratio of all departments simultaneously.