The open absorption system can recover water and latent heat from industrial flue gases with a higher return water temperature than conventional condensing boilers. In spite of the high efficiency, there are still a lot of unsolved problems in real applications, including the steady operation control and the optimal parameter selection. In this paper, we established a whole-cycle simulation model of a flue-gas-driven open absorption system, which was validated by various experiments to be capable of predicting the operating states of every working fluid for all kinds of actual conditions. Based on this model, we analyzed the actual performance of the system with varying temperatures, flow rates and humidity in a large range. We found that the balance between the vapor absorption and vapor generation is crucial for the optimal operation of the system. The real-time flow rate of the circulating solution should be adjusted with the varying working conditions to achieve the optimal system performance. We further proposed an optimized system based on the theoretical analysis, which can enhance the overall performance by redistributing the circulating solution within the system. The optimized scheme was well demonstrated by experiments with different flue gas humidity ratios. Compared with the original system, the heat recovery and the water recovery of the optimized one were increased by 3.0-23.8% and 5.1-41.4%, respectively, when the split ratio (flow rate ratio of the regenerating solution and the spraying solution) was varied between 0.8 and 0.2. The whole-cycle simulation results and the proposed optimization scheme will evidently contribute to the efficiency improvement of industrial waste heat recovery.