Relay stations (RSs) are usually used to enhance the signal strength for the users close to the cell boundary. However, transmission through a relay station needs two transmission phases, i.e., one is from the base station to the relay station and the other is from relay station to mobile stations. Thus, relay may also decrease system capacity if two-phase transmission time is considered. As a result, whether or not data are transmitted by one-hop or two-hop transmission should be determined based on both signal strength and throughput. In this paper, we investigate the optimal relay location aiming to maximize system capacity. We consider two relay selection rules for determining whether a two-hop transmission is necessary: signal strength-oriented and throughput-oriented. We find that the signal strength-oriented two-hop transmission may yield even lower system capacity than the one-hop transmission. Based on the throughput-oriented rule, we find that the throughput in the two-hop transmission can be higher than that in the one-hop transmission at some locations. We also identify the optimal relay location that can achieve the highest system capacity.