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Unlike steady-state optimization and linear model predictive control, dynamic optimization and nonlinear model predictive control is underway to industry application. This paper discusses the implementation issues of two-level control strategy integrated dynamic real-time optimization and nonlinear model predictive control of a heat-integrated distillation column system. To realize this scheme, four nonlinear programming problems: economic operation optimization, data reconciliation and state estimation, parameter estimation and nonlinear model predictive control, are considered based on system rigorous dynamic model. The economic operation optimization is to minimize the cost of the plant. The unmeasured states are estimated by measurements of temperatures, pressures and flow rates. Time-variant parameters such as tray efficiencies and feed composition are updated on-line. The sequential quadratic programming and orthogonal collocation are used to solve the dynamic nonlinear optimization problems.