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Summary and Conclusions-This paper presents four models for optimizing the reliability of embedded systems considering both software and hardware reliability under cost constraints, and one model to optimize system cost under multiple reliability constraints. Previously, most optimization models have been developed for hardware-only or software-only systems by assuming the hardware, if any, has perfect reliability. In addition, they assume that failures for each hardware or software unit are statistically independent. In other words, none of the existing optimization models were developed for embedded systems (hardware and software) with failure dependencies. For our work, each of our models is suitable for a distinct set of conditions or situations. The first four models maximize reliability while meeting cost constraints, and the fifth model minimizes system cost under multiple reliability constraints. This is the first time that optimization of these kinds of models has been performed on this type of system. We demonstrate and validate our models for an embedded system with multiple applications sharing multiple resources. We use a Simulated Annealing optimization algorithm to demonstrate our system reliability optimization techniques for distributed systems, because of its flexibility for various problem types with various constraints. It is efficient, and provides satisfactory optimization results while meeting difficult-to-satisfy constraints.