Most research works in routing and design of optical networks assume that the optical medium can carry data signals without any bit error. However, physical impairments of the optical signal introduced by optical fibers and components, e.g., power loss, noise, and dispersions, impose fundamental constraints in WDM networks, and must be taken into consideration in the routing and design problems of WDM networks. Only through 3R (optical-electrical- optical) regeneration (reamplification, reshaping, retiming) with OEO conversion can a lightpath be recovered from those impairments. Because 3R regenerators are costly devices and the OEO conversion can affect the efficiency of optical networks we need to use the regenerators efficiently and effectively. In this paper, we study the problem of placing the minimum number of regenerators to accommodate all requests with the consideration of physical impairments. We first propose a novel ILP formulation for an optimal solution and a benchmark for this problem. We then provide an effective heuristic for large-sized WDM networks. Simulation results show that our schemes have good performance in terms of network design and running time.