Bolstered by significant productivity improvement in manufacturing technology, the construction paradigm has shifted toward industrialized construction methods, such as modular construction. Modular construction has benefitted from the long term development of the manufacturing technologies and core techniques used in the assembly production lines of construction prefabrication plants. Lean production is a methodological approach for assembly line production that aims to eliminate waste, minimize inventory, and maximize production flow. This research proposes implementation of lean concepts through combined discrete-event and continuous simulation approaches with the aim of increasing the productivity of a modular construction element. The proposed model incorporates a simulation of the system reliability by modeling various problems detected within the production line, such as double-handling. Applying continuous simulation facilitated attaining optimal threshold by detecting the inventory level. In addition, improvements are implemented within the model, such as introducing advanced alternatives for the automated stations and adding parallel stations to increase productivity. The effect of proposed production line improvement, along with each station improvement are examined and investigated.