A lithographic apparatus applies patterns to substrates, the substrates being processed as a plurality of lots. Each lot of substrates receives a particular layer pattern under layer-specific operating conditions. A thermal model is provided for modeling and compensating one or more characteristics of thermal behavior of components within the lithographic apparatus, in response to the varying layer-specific operating conditions associated with a sequence of lots. The thermal model is also used to simulate thermal behavior of the apparatus when processing a given collection of lots in different possible sequences. Based on comparison of the simulated thermal behavior in different sequences of lots, an optimized sequence is determined. Optionally, lot sequencing rules are determined and used to obtain a preferred thermal behavior when processing a collection of lots in the future.