Effective management of water resources, especially groundwater, is crucial and requires a precise understanding of aquifer characteristics, imposed stresses, and the groundwater balance. Simulation-optimization models plays a vital role in guiding planners toword sustainable long-term aquifer exploitation. This study simulated monthly water table variations in the Kashan Plain over a ten-year period from 2008 to 2019 across 125 stress periods using the GMS model. The model was calibrated for both steady-state and transient conditions for the 2008–2016 period and validated for the 2016–2019 period. Results indicated a 4.4 m decline in groundwater levels over the 10-year study period. Given the plain's location in a arid climatic zone with limited effective precipitation for aquifer recharge, the study focused on groundwater extraction management. A modified two-point hedging policy was employed as a solution to mitigate critical groundwater depletion, reducing the annual drawdown rate from 0.44 m to 0.31 m and conserving 255 million cubic meters (mcm) of water annually. Although this approach slightly decreased reliability (i.e. the number of months meeting full water demands), it effectively minimized the risk of severe droughts and irreparable damages. This policy offers managers a dynamical and intelligent tool for regulating groundwater extraction, balancing aquifer sustainability with agricultural and urban water requirements.