Coastal areas are densely populated due to associated socioeconomic benefits, and therefore have higher demand for freshwater. This ever-increasing demand for freshwater can be met by coastal aquifers, which act as giant reservoirs of freshwater. Excessive and unmanaged pumping from coastal aquifer allows saltwater to flow inward encroaching the voids created by pumping of freshwater. This phenomenon is called saltwater intrusion. To stop saltwater intrusion, an optimal pumping strategy needs to be adopted. Simulation models are generally linked with an optimization algorithm to develop optimal pumping strategy for management of saltwater intrusion. Sharp interface based simulation models are often used which are computationally inexpensive but lacks in prediction accuracy, as it does not incorporate the effects of dispersion and diffusion. Density dependent simulation models include the effect of dispersion and diffusion, but have very high computational budget in evaluating an optimal pumping strategy. To overcome above mentioned limitations a new methodology is developed, where a density-dependent model is used in conjunction with a sharp interface model to derive an optimal density ratio, such that interface obtained using this density ratio implicitly accommodates the effect of dispersion and diffusion in a sharp interface model. The performance of the developed methodology is evaluated for three hypothetical scenarios of saltwater intrusion, and in densely populated coastal city of Puri in India. The performance evaluation results show the applicability of the developed methodology for management of saltwater intrusion while maximizing freshwater pumping from coastal aquifers.