In some aspects, the present disclosure includes systems and methods for optimizing one or more of a number of sensors on a drillstring or the locations of the sensors on the drillstring, or the types of the sensors. The method includes determining a number of sensors to place on a drillstring, a location for each of the sensors based, and types of sensors based, at least in part, on one or more of a state reduction technique and an optimization framework. The method includes disposing the selected number of sensors along the drilling and performing a drilling operation.