Introduction This paper presents the findings of a case study in which Emerson Climate Technologies’ System Design Simulator, a steady-state system modeling tool, was used to evaluate design options rather than implementing the changes incrementally in a laboratory test and evaluating the results of each change. Simulation software has proven to drastically reduce development time and cost by limiting the need for expensive and time consuming laboratory testing. Three different system types were used in this study to show the capability of the model and identify design options for improving performance. The three system types were: 3 Ton Air Source Heat Pump: It was selected as it is the most common system using conventional round tube finned heat exchangers in indoor and outdoor units. 5 Ton Heat Pump Pool Heater: This unit was selected to show SDS’s ability to model other system types. It uses coaxial heat exchanger in the outdoor unit and round tube finned heat exchanger in the Indoor Unit. . 2.5 Ton Residential Split System with a Micro Channel Condenser: Unit is equipped with Micro Channel condenser in the outdoor unit whereas the indoor unit has round tube finned heat exchanger. Methodology Several design options that may improve performance were identified for all three systems but only design options for the 13.7 SEER, 3 ton Heat Pump will be presented, including validation runs for the other two systems. Targeted performance testing was used to validate the modeling tool during the re-design exercise. For simplicity, the following parameters are investigated in this exercise: 1. Optimize refrigerant charge by managing compressor Superheat and Condenser Subcooling) and superheat). 2. Optimize refrigerant circuits in indoor and outdoor coils. 3. Change to higher efficiency fan motors in indoor and outdoor units. 4. Optimizing the air flow rate in indoor and outdoor units. 5. Effect of smaller displacement compressor. 6. Evaluate effect of two-capacity compressor. The overall SEER for the final system configuration was 15.8 Btu/Wh resulting in gain of about 16%. Breakdown of gain from each design option will be listed. Using the simulation tool to model the system and analyze numerous design changes eliminated several weeks of laboratory testing and evaluation. While the real cost of engineering time varies by organization, it can safely be shown that there was a significant cost saving associated with using the simulation tool. It also offers opportunity to streamline the product development process and speed of the time it takes to get new products to market.