The novel, discrete, time-varying, state space models of the slab and walking beam reneating furnaces have been developed based on the partial differential equations with corresponding boundary conditions describing the unsteady state heat conduction and heat flux on the steel surfaces respactively. The models as developed give the estimates of the unmeasurable slab or billet temprature profiles in the furnace by using the input data sequences of the measurable zone temperatures. Industrial experimental data have shown excellent agreement between simulation results developed from the model and corresponding conditions in the real process.Study of the process involved using the computer simulation has shown that some significant energy savings are possible in this process. Dynamic model based heuristic optimization algorithm for minimizing fuel consumption has also been developed.