Real-time optimization systems have become a common tool, in the continuous manufacturing industries, for improving process performance. Typically, these are on-line, steady-state, model-based optimization systems, whose effectiveness depends on a large number of design decisions. The work presented here addresses one of these design decisions and proposes a systematic approach to the selection of sensors to be used by the RTO system. This paper develops a sensor system selection metric based on a trade-off between two approaches to the design of experiments, which is shown to be consistent with the design cost approach of Forbes and Marlin [Computers Chem Eng 20 (1996) 7/7]. The resulting design metric is incorporated into a systematic procedure for RTO sensor selection problem. Finally, the proposed RTO sensor selection procedure is illustrated with a case study using the Williams-Otto [AIEE Trans 79 (1960), 458] plant. (C) 2002 Elsevier Ltd. All rights reserved.