System and method for reducing fuel consumption of a work vehicle based on estimated parastic power losses

In one aspect, a system and method allow for various pairs of candidate gear ratios and engine speeds to be identified for achieving a desired ground speed of a work vehicle. The individual operating efficiencies of one or more of the power-consuming components of the work vehicle may then be analyzed for each pair of transmission/engine settings to estimate the associated parasitic power loss(es) within the system. Based on the parasitic power loss value determined for each transmission/engine setting, a net engine power or torque requirement can be calculated and used as an input for determining the fuel efficiency of the work vehicle at each candidate setting. The gear ratio and corresponding engine speed of the candidate setting associated with the lowest fuel consumption may then be set as the target or desired transmission/engine setting for maintaining the work vehicle at the desired ground speed.