Due to their space limitation and small production scale, small and medium enterprises (SME) are vulnerable to rapid changes. Lean principles are considered as effective improvement approach to eliminate system's waste and inefficiencies. Although much of the academic materials have addressed the lean practices into large, global companies, they can still be adjusted to SMEs. Risks are usually associated with lean implementation process due to the drastic required changes in business policies and operations. Simulation can be successfully used to predict the impact of the proposed changes ahead of the implementation which helps to mitigate risks. Integrating simulation with optimization techniques provides optimum set-tings of the lean factors prior to the go live stage. In this study, simulation based optimization model was developed to optimize a set of parameters of lean SME against three performance measures - cycle time, WIP (work in process) and workforce utilization. Results showed constructive insights.