The paper describes a methodology for engine concept analysis by using cycle simulation coupled with optimization techniques (Taguchi Methods). The methodology was applied to the analysis of power output of a diesel engine as a function of five complex design parameters (“controllable factors”) and four uncontrollable parameters (“noise factors”). A thermodynamic cycle simulation program for a turbocharged diesel engine was used for power output computation. An L18 inner array with an L9 outer array were used for the Taguchi optimization. This methodology enables optimization early in the design stages and minimizes the needs for expensive and time consuming hardware testing, thus reducing product development time.