System-level design refers to a synthesis, analysis, and optimization process which reasons with the system in a holistic manner. We are developing a model-based approach to support parametric system-level design optimization. In this paper, we describe our modeling methodology based on the Environment Relationship net framework (Ghezzi et al. 1991} to represent a system for the purpose of design optimization. Specifically, we model a reprographic machine system (e.g., printer, photocopier) whose elements include hardware components and software processes. We discuss the issues that arise in modeling this system and the challenges that remain to be addressed.