Abstract: A method of optimizing a multi-stage serial manufacturing system which includes: (a) providing a quantitative state-space model of said serial manufacturing system that describes processing in terms of sensitivity information and performance in terms of part production and storage/retrieval, said description using process switches in the form of buffer status indicators that express coupling between stages; (b) sensing new sensitivity information that results from simulating said manufacturing system with said model using estimated system performance information; and (c) adjusting said performance information by iteratively using said new sensitivity information in an optimization algorithm, said adjustment being carried out simultaneously with the simulation of step (b).