A bio-economic model was developed to estimate economic values of up to 35 milk production, growth, carcass, wool and functional traits in.dairy or dual purpose milked sheep under alternative management systems. Markov chain approach was used to calculate the stationary state of the ewe flock. Performance for most traits was simulated as the population average, but variation in several traits was taken into account. Management options included lambing intervals, mating system, and culling strategy for ewes, weaning and marketing strategy for progeny, and feeding system. The present value of profit computed as the difference between total revenues and total costs per ewe per year, both discounted to the birth date of the animals, was used as the criterion for economic efficiency of the production system in the stationary state.