A. Using LCS services.
B. Manual using command prompt.
Here I’ll show using command prompt, as I found its better than LCS (After successfully deploy many packages J)
Follow below steps,

1. Create Deployment Package:
Run VS as admin, Go to Dynamics AX menu. Select Create a deployment package as shown below.

Choose your package from list and path to save this file

Click on create.
It will take few minutes to complete this process.
2. Upload on LCS shared library:
However, we are not using LCS in this demo, but it’s always a good practice to maintain all deployment package on LCS. You can use this library to deploy this package to any environment that is part of your project.
Upload this file to LCS, shared asset library> S/w deployable package

Click on + button, Fill the details, select the package

Add file and, upload the same.

After upload done, click on confirm.
3. Open Other environment (RDP).
4. Copy this package to this box (Download this package from LCS there. OR copy paste there).
5. Now, first right click on zip file, unlock this. Expend it.
Now run this command for all child folders, unlock this zip file using PowerShell command
Get-ChildItem C:\Users\axlocaladmin\Downloads\ AXDeployablePackage_20160923_05_36_14-recurse | Unblock-File –Confirm

6. Generate runbook for this package.
    a. Open command prompt as administrator
    b. Navigate to your package folder
    c. Run below command
On any VM, run the following command to generate the runbook.
AXUpdateInstaller.exe generate –runbookid=[runbookID] –topologyfile=[topologyFile] –servicemodelfile=[serviceModelFile] –runbookfile=[runbookFile]
Here is an explanation of the parameters that are used in this command:
      i. [runbookID] – A parameter that is specified by the developer who applies the deployable package
      ii. [topologyFile] – The path of the DefaultTopologyData.xml file
      iii. [serviceModelFile] – The path of the DefaultServiceModelData.xml file
      iv. [runbookFile] – The name of the runbook file to generate (for example, AOSRunbook.xml)
Example
AXUpdateInstaller.exe generate -runbookid=" AXDeployablePackage_20160923_05_36_14-runbook" -topologyfile="DefaultTopologyData.xml" -servicemodelfile="DefaultServiceModelData.xml" -runbookfile=" AXDeployablePackage_20160923_05_36_14-runbook.xml"
The runbook provides the sequence of steps that must be run to update the environment. The following illustration shows an example of a runbook file. Each step in a runbook is associated with an ID, a machine name, and step execution details.
Sometimes runbook id will not generated correctly, so you have to manually update the same in runbook file. Simply copy your folder name and out it as runbook id in xml file.

This process will generate a runbook xml file into package folder.
7. Import the runbook by running the following command.
AXUpdateInstaller.exe import -runbookfile=[runbookFile]
Example
AXUpdateInstaller.exe import -runbookfile=" AXDeployablePackage_20160923_05_36_14-runbook.xml"

8. Verify the runbook.
AXUpdateInstaller.exe list

Execute the runbook.
AXUpdateInstaller.exe execute -runbookid=[runbookID]
Example
AXUpdateInstaller.exe execute -runbookid=" AXDeployablePackage_20160923_05_36_14-runbook"
Export the runbook.
AXUpdateInstaller.exe export -runbookid=[runbookID] -runbookfile=[runbookFile]
Example
AXUpdateInstaller.exe export -runbookid="VAL200AA2BMEDIU-runbook" -runbookfile="VAL200AA2BMEDIU-runbook.xml"
AXUpdateInstaller updates the runbook file after each step is run on a VM. The runbook also logs information about each step.

Troubleshooting:
1. Sometimes you will get some issue on execution, so it’s better to rename the package folder and use old name in runbook.
For eg: If your package file name is like “AXDeployablePackage_20160923_05_36_14” Than you have to rename this folder as “AXDeployablePackage”. Now unlock this folder using PowerShell and try with further steps.
2. For more detail check below links.
https://ax.help.dynamics.com/en/wiki/installing-deployable-package-in-ax7/